In recent weeks, the market’s expectations for South African interest rates have shifted towards pricing in a much less aggressive rate cut cycle through 2024.

Whereas the market had anticipated four rate cuts in 2024 at the start of the year, pricing suggests that they are now only guaranteed one, with a high probability of a second late in the year.

Shifting US rate cut expectations, coupled with the weakness of the ZAR and ongoing impediments from SOEs and municipalities that have raised the cost of doing business, means that the SARB has no choice but to remain more conservative in its stance.