Key points

  • There has been a significant adjustment lower in domestic inflation and interest expectations since the previous update. Much of this has been fueled by the reset lower in global interest rate bets and a tumbling USD, prompting an aggressive rally in the ZAR.
  • The recent ZAR strength will go a long way in supporting the ongoing domestic disinflation trend as it reduces the cost of imported consumer goods and services. While inflation is decelerating, we still see room for one final 25bps rate hike next month, as it will help shore up the ZAR’s resilience.


Although the movements in the rand have been significant and will help ease the SARB’s concerns about inflation going forward, ETM Analytics remains of the view that the MPC will take a cautious approach to ensure it anchors inflation and inflation expectations by delivering one final rate hike at the upcoming meeting. After that, we expect the SARB to leave rates unchanged for the remainder of the year.