ETM retains its view that a November rate cut is possible. This contrasts with the market which implies that it is not, and that the first rate cut might only materialize deep into 2024.

However, the underlying rationale for anticipating a November rate cut is conditional. It assumes that the May general elections will proceed without any drama or disruptions and that the result will avoid the worst-case scenario of the ANC teaming up with the MK or EFF parties.

So much bad news has been priced into the ZAR, that a constructive outcome should help the ZAR appreciate sharply, which in turn will detract from inflationary pressures and open the door for a rate cut, especially if the Federal Reserve eases policy in the US.