Key points

  • Easing local inflation and the maturity of the global monetary policy tightening cycle support the case for the SARB to keep rates on hold through the remainder of the year following its pause in July. The SARB has tightened policy aggressively this cycle, and now it needs to let that filter through completely into the economy to bring inflation back to target levels on a sustainable basis.

  • The recent ZAR volatility will be a concern for the SARB and, if sustained, can cause a shift in inflation expectations. However, for now, the market seems to be looking past it, with FRAs pricing in a flat rate trajectory over the medium term and breakeven rates falling back down to February lows.

Read Full Report