Headline Consumer Price Index (CPI) data for South Africa showed inflation to be at 4.7% annualised in June 2015. Despite the figure remaining within the reserve banks targeted range (as it has for the past few months), the repo rate increased by 0.25% at this week’s Monetary Policy Committee (MPC) meeting.
Reserve Bank Governor, Mr Lesetja Kganyago, increased the repo rate to 6% citing upside inflationary risks as motivation thereof. Cost-push catalysts such as the Greek crisis, U.S. monetary tightening, commodity price weakness as well as Chinese equity market uncertainty were among the risks referred.
The GDP growth forecast was revised lower to 2% (from 2.1% at the last MPC meeting), while the current account deficit is expected to be around 4.6% of GDP for the year.
In Europe, Greece parliament approved the EU conditions in lure of accessing bailout funds and remaining part of the euro. French and German manufacturing PMI data both fell short of consensus estimates, with the French data also alluding to minor industry contraction.
In the U.S., weekly jobless claims data was reported at a multi decade low with 255000 people filing for unemployment benefits (est. 279000). Crude oil inventory data showed that 2.5m commercial firms held more barrels of oil in the past week (est. -1.7m).
The week ahead
As global growth remains an essential market theme at present, markets will pay close attention to Preliminary GDP data out of the U.K. on Tuesday and Advance GDP data out of the U.S. on Thursday in the upcoming week. Also of increased significance (U.S.) will be the Federal Open Market Committee statement and rates announcement on Wednesday evening.