{"id":32289,"date":"2022-10-26T18:17:20","date_gmt":"2022-10-26T18:17:20","guid":{"rendered":"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year"},"modified":"2022-10-26T18:24:48","modified_gmt":"2022-10-26T18:24:48","slug":"inflation-could-be-lower-for-rest-of-year","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year","title":{"rendered":"‘Inflation could be lower for rest of year’"},"content":{"rendered":"

Africa-Press – Namibia. <\/strong><\/span>The monetary policy committee of the Bank of Namibia met over the first two days of this week to deliberate on the monetary policy going forward, which governor Johanness !Gawaxab is expected to announce this morning. Simonis Storm analyst Theo Klein hints on expectations.<\/p>\n

THE repo rate remains low relative to inflation in Namibia and South Africa, suggesting that the monetary policy is accommodative at the moment.<\/p>\n

However, the gap is narrowing as rates rise and we believe inflation peaked in July 2022 in South Africa and August 2022 in Namibia.<\/p>\n

Going forward, we certainly expect inflation to come in lower during the remainder of 2022 and 2023 as well.<\/p>\n

This is mainly due to observing more global deflationary pressures and the fact that inflation rates will be coming off a high base.<\/p>\n

The South African Reserve Bank (SARB) quarterly projection model estimates a neutral rate of 6,75%, while other economists estimate between 7,25% and 7,5%.<\/p>\n

The neutral rate is theoretically the interest rate at which the monetary policy is neither expansionary, nor contractionary, keeping inflation constant.<\/p>\n

As the repo rate approaches the neutral rate, it could warrant the SARB to be more gradual in the pace of interest rate hikes going forward.<\/p>\n

The risk of continuing with an aggressive (that is, front loading) rate hiking cycle in South Africa \u2013 and Namibia by implication \u2013 is that monetary policy becomes restrictive for an economy not experiencing demand-pull inflationary pressures and having numerous domestic economic growth challenges.<\/p>\n

This implies that the rate hiking cycle in South Africa \u2013 and Namibia \u2013 could come to an end by early 2023.<\/p>\n

Tight financial conditions for indebted Namibian households and corporates lie ahead as rate hikes are expected to rise further towards the end of this year and during the first quarter of 2023.<\/p>\n

Minutes from the FOMC meeting indicated that \u201chistorical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation\u201d.<\/p>\n

This supports the notion that although the rate hiking cycle might end in the first quarter of 2023, interest rates globally and locally will likely remain at elevated levels for a while, before we see rate cuts taking place.<\/p>\n

Hence, we expect a 50bps repo rate hike in first quarter of 2023 in both South Africa and Namibia, followed by two consecutive 25bps cuts in the third and fourth quarters of 2023.<\/p>\n

THE repo rate remains low relative to inflation in Namibia and South Africa, suggesting that the monetary policy is accommodative at the moment.<\/p>\n

However, the gap is narrowing as rates rise and we believe inflation peaked in July 2022 in South Africa and August 2022 in Namibia.<\/p>\n

Going forward, we certainly expect inflation to come in lower during the remainder of 2022 and 2023 as well.<\/p>\n

This is mainly due to observing more global deflationary pressures and the fact that inflation rates will be coming off a high base.<\/p>\n

The South African Reserve Bank (SARB) quarterly projection model estimates a neutral rate of 6,75%, while other economists estimate between 7,25% and 7,5%.<\/p>\n

The neutral rate is theoretically the interest rate at which the monetary policy is neither expansionary, nor contractionary, keeping inflation constant.<\/p>\n

As the repo rate approaches the neutral rate, it could warrant the SARB to be more gradual in the pace of interest rate hikes going forward.<\/p>\n

The risk of continuing with an aggressive (that is, front loading) rate hiking cycle in South Africa \u2013 and Namibia by implication \u2013 is that monetary policy becomes restrictive for an economy not experiencing demand-pull inflationary pressures and having numerous domestic economic growth challenges.<\/p>\n

This implies that the rate hiking cycle in South Africa \u2013 and Namibia \u2013 could come to an end by early 2023.<\/p>\n

Tight financial conditions for indebted Namibian households and corporates lie ahead as rate hikes are expected to rise further towards the end of this year and during the first quarter of 2023.<\/p>\n

Minutes from the FOMC meeting indicated that \u201chistorical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation\u201d.<\/p>\n

This supports the notion that although the rate hiking cycle might end in the first quarter of 2023, interest rates globally and locally will likely remain at elevated levels for a while, before we see rate cuts taking place.<\/p>\n

Hence, we expect a 50bps repo rate hike in first quarter of 2023 in both South Africa and Namibia, followed by two consecutive 25bps cuts in the third and fourth quarters of 2023.<\/p>\n

For More News And Analysis About Namibia<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Namibia. The monetary policy committee of the Bank of Namibia met over the first two days of this week to deliberate on the monetary policy going forward, which governor Johanness !Gawaxab is expected to announce this morning. Simonis Storm analyst Theo Klein hints on expectations. THE repo rate remains low relative to inflation […]<\/p>\n","protected":false},"author":84,"featured_media":32288,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[234,236,233],"class_list":["post-32289","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","tag-africa-press","tag-africa-press-namibia","tag-namibia"],"yoast_head":"\n'Inflation could be lower for rest of year' - Namibia<\/title>\n<meta name=\"description\" content=\"The monetary policy committee of the Bank of Namibia met over the first two days of this week to deliberate on the monet ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"'Inflation could be lower for rest of year'\" \/>\n<meta property=\"og:description\" content=\"The monetary policy committee of the Bank of Namibia met over the first two days of this week to deliberate on the monet ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year\" \/>\n<meta property=\"og:site_name\" content=\"Namibia\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2022-10-26T18:17:20+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-10-26T18:24:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/nambia\/sites\/29\/2022\/10\/postQueueImg_8-63597b4f0be76.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"750\" \/>\n\t<meta property=\"og:image:height\" content=\"450\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/namibia\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"‘Inflation could be lower for rest of year’\",\"datePublished\":\"2022-10-26T18:17:20+00:00\",\"dateModified\":\"2022-10-26T18:24:48+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year\"},\"wordCount\":740,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/nambia\/sites\/29\/2022\/10\/postQueueImg_8-63597b4f0be76.jpg\",\"keywords\":[\"africa press\",\"Africa Press-Namibia\",\"namibia\"],\"articleSection\":[\"all news\",\"files\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year\",\"url\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/inflation-could-be-lower-for-rest-of-year\",\"name\":\"'Inflation could be lower for rest of year' - 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