Key points

  • The Fed surprised the market to become more growth-sensitive than many investors had anticipated. Although a lot had been priced in, and the market believed this to be the top of the interest rate cycle, few had expected the Fed to turn dovish and to build expectations of rate cuts. The interpretation is that the Fed needs to pivot towards easier monetary policy to ensure a soft landing.
  • Numerous data points now allude to a shift in economic conditions that demand a shift in monetary policy dynamics. As the conditions manifest through H1 2024, the central banks may bring forward the timing of their rate cuts, but that will depend on whether inflation moderates to create room for them to do so and if growth softens sufficiently.


The Fed’s surprise in turning dovish signals that the inflexion point is upon us and that rate cuts should begin through H1 2024, starting as early as March. This should be good news for the ZAR given that the SARB will likely be more conservative in its policy vs the Fed.

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