Business Day reports that another interest rate hike is almost certain on Thursday.

“After last week’s slew of disappointing data, analysts say an interest rate hike at the Bank’s MPC meeting, which takes place on Wednesday and Thursday, is virtually guaranteed.

Bank governor Tito Mboweni has said time and again that the MPC will not hesitate to act to protect the inflation target should it be threatened. Already rates have been hiked by a cumulative 150 basis points this year.

“It does not seem likely that the Bank will give consumers any respite prior to the Christmas shopping period as risks to the inflation outlook remain on the upside,” notes Nedbank chief economist Dennis Dykes.

Credit growth, inflation, as well as trade balance data released last week, all point to further monetary policy tightening, with some analysts even expecting the rate hike cycle to extend to early next year.

While this week’s meeting seems to be a green light for the MPC to hike rates by another 50 basis points, a more challenging question is when markets can anticipate an end to the tightening cycle, says Brait economist Colen Garrow.

“With credit and monetary aggregates seemingly immune to the tightening in rates, the Bank has ample reason to lift rates not only next week, but probably also at its first meeting next year,” he says

The local economy is expected to enjoy more balanced growth in coming quarters, with the negative effects of slowing consumer spending likely to be offset by rising infrastructure spending.

Although growth at current levels is encouraging, a closer look at the data suggests that the main contributors to growth are coming from the demand side of the economy.

Third-quarter gross domestic product (GDP) data released last week by Statistics SA indicate that although economic growth slowed in the quarter, it does, however, continue to grow at robust levels. Economic growth slowed to 4,7% in the quarter, down from an upwardly revised 5,5% in the second quarter.

Economic activity is expected to slow slightly in the last quarter of this year and into next year.

Dykes says government’s continued focus on infrastructure investment as well as a number of large capital expenditure projects announced by the private sector will, however, continue to support performance in the broader construction, transport and communication sectors as well as parts of mining and manufacturing.

The inflation outlook remains uncertain, dependent to some extent on oil prices, as well as the performance of the rand.

CPIX inflation (consumer price index less mortgage costs), the Bank’s targeted measure of inflation, slowed marginally to 5%, in October, from 5,1% in September. The slowdown is seen only as temporary, however, as the rand and oil prices remain volatile.

“The moderately softer inflation in October came mainly on the back of lower petrol prices, which are likely to continue to be the key determinant of inflation numbers in the short term,” says Standard Bank economist Elna Moolman.

However, this does not derail the expected acceleration in inflation in the medium term, consequently, at least one more interest rate hike of 50 basis points is still on the cards, she says.

Today, the National Association of Automobile Manufacturers of SA releases November vehicle sales data, and the effects of interest rate hikes are likely to start showing.

“The consumer side of the economy will come under the spotlight because September retail trade data are scheduled for release on Wednesday,” notes Efficient Group economist Fanie Joubert.

Retail sales, the main indicator of consumer demand, have remained at strong levels despite the rate hikes. Economists say this indicator will start slowing in coming months as monetary policy operates with a lag.”