Another meeting, another hike.The MPC increased interest rates by 75bps for the third consecutive meeting, taking the policy rate to 7%. This means that the pandemic-led policy accommodation has now been fully undone, with the repo rate now 50bps above the end-2019, pre-pandemic level of 6.5%. The latest decision takes the current hiking cycle to a cumulative 350bps from a historical low of 3.5% that was intended to support economic activity during the depth of the pandemic. Interestingly, however, the distribution of votes has become less hawkish, which could be an indication that we are nearing the peak in interest rates. Below is their latest prognosis of the economy.
In the intermediate series we will cover the following topics
