Absa flags war risks

BANK: SOUNDS WARNING ON ENERGY PRICES, RAND, AMID RECORD PROFITS

- Hilton Tarrant Moneyweb

EFFECTS. The lender warns Middle East tensions could weaken the rand and complicate rate-cut expectations even as earnings climb. Picture: Bloomberg

(Bloomberg)

Absa Group has warned that "a prolonged bout of military action in the Middle East could see energy prices higher and for global risk appetite to wane", which "would likely translate into a weaker path for the rand, somewhat higher inflation, a more cautious approach to interest rate cuts by the Reserve Bank, and somewhat weaker economic growth".

Despite some market speculation, it sees "the bar for the Monetary Policy Committee to reverse course on rates as quite high and thinks it very unlikely that the global environment would trigger the onset of a rate hiking cycle".