In this weekly market review, TreasuryONE’s currency strategist, André Cilliers discusses the critical week ahead as major central banks, including the Federal Reserve in the US, the South African Reserve Bank (SARB), and the Bank of Japan, prepare to announce their interest rate decisions. The focus is primarily on the Federal Reserve, where the market is divided between expectations of a 25 or 50 basis point interest rate cut. Andre explains the potential impact of both decisions on the markets, highlighting that either move could generate volatility.
The discussion also touches on the Bank of Japan, which is expected to maintain its current rates despite rising inflation. Andre notes that Japan is trailing behind other markets in addressing inflation, and while it caused market disruption with its last rate hike, the expectation is that they will hold steady for now. The review emphasizes that this decision is less crucial compared to the Federal Reserve’s impact on global markets.
For South Africa, the SARB’s decision follows the latest CPI data release, with inflation sitting at an ideal 4.5%. Andre suggests that a 25 basis point cut is most likely, aligning with Governor Kanyako’s focus on maintaining inflation control rather than stimulating growth. However, a more aggressive 50 basis point cut could be triggered if the Federal Reserve opts for a similar approach.
The review concludes with a look at potential market reactions, particularly for the South African Rand, which is expected to remain within a specific range unless there are significant surprises from the Federal Reserve. #economicweekly #financialmarkets #financialmarkets