Interest rate relief is not around the corner, as highlighted by the recent article featured in BusinessTech – Perfect Storm Hitting Interest Rates in South Africa.
“Hopes for interest rate relief in South Africa anytime soon are dimming as a perfect storm of adverse conditions, with risks on the upside, in play.
This includes:
- Higher inflation than expected already recorded in the first months of the year
- Higher fuel prices add to inflationary pressures, with more hikes expected
- Upwards pressure from food prices, with weather conditions adding risks for crops this year
- The weakening rand against the US dollar
- Tax pressure is kicking in, particularly sin taxes
- Global central banks pushing rate cuts back Investec chief economist Annabel Bishop says all of these conditions—and the risk of worse to come—support a delay in the start of South Africa’s interest rate cut cycle.
The tone on interest rate cuts in 2024 has turned quite sharply, with economists and analysts switching from expectations of a start to the cutting cycle around May or July to September or even November.
This is in line with a global shift in sentiment around rates, where markets anticipate a much later start to rate cuts.”
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