Interest Rate Watch: US, EU, and SA Central Banks in Focus as Tariff Talks Continue

In this week’s market update from TreasuryONE and ETM Analytics, Currency Strategist Andre Cilliers outlines key global and local developments shaping the economic landscape.

The focus remains on the looming 1 August US tariff deadline, with renewed momentum in trade negotiations. A significant agreement with the European Union has been tabled, potentially easing tension between two of the world’s largest trading blocs. The deal includes military investment commitments and reduced tariffs, notably benefitting the euro, which has gained slightly against the dollar.

Attention now turns to monetary policy decisions. The US Federal Reserve is widely expected to hold rates steady, although a surprise rate cut remains a possibility amid evolving inflation pressures and President Trump’s continued calls for easing. Market consensus suggests a 30–35% chance of a cut, with upcoming jobs and inflation data to be closely watched.

In South Africa, Reserve Bank Governor Lesetja Kganyago is also due to make an interest rate announcement. Despite recent inflation edging up to 3%, it remains well within the target band, and subdued economic growth supports the case for a 25 basis point cut. Still, a “wild card” scenario exists where the SARB opts to keep rates unchanged, exercising caution in the face of global uncertainty.

The South African rand opened the week slightly weaker but remains comfortably within its trading range of R17.60 to R18.00 per US dollar. Cilliers notes that most of the anticipated tariff impact has already been priced in, and current levels are expected to hold barring unexpected shocks. With key decisions from the Fed, SARB, and ECB all due in the coming days, markets remain cautious but stable.