Market sentiment is heavily dominated by the upcoming South African Reserve Bank (SARB) Monetary Policy Committee (MPC) meeting on May 28.
- The Inflation Bump: While consumer price index (CPI) inflation was sitting comfortably near the bottom of the SARB’s target range earlier this year, a minor upward tick to 3.1%—combined with the lagging effect of April’s global fuel price shocks—has economists on alert.
- Hawkish Outlook: Financial markets (specifically Forward Rate Agreements) are already factoring in the possibility of future rate hikes to combat second-round inflationary pressures. While the repo rate is currently restrictive at 6.75%, the big question is whether Governor Lesetja Kganyago will skip a hike this month or strike pre-emptively.