Local Markets ReviewNovember 22, 2023
UB40 and South Africa’s Unemployed YouthNovember 24, 2023
Concerns that interest rates will remain high for longer persisted in global markets throughout October. The US Federal Reserve (Fed) held rates unchanged, and its statement made clear that it remains biased towards further tightening.
The local headline Consumer Price Index (CPI) rose to 5.4%, primarily driven by higher fuel costs, after the petrol price increased by R1.71 per litre in September. The acceleration in headline inflation does not change our view that rates may have peaked, and the South African Reserve Bank (SARB) is likely to keep rates on hold until there is evidence of a reduction in inflation risks. Although the Rand exhibited modest strength in October, appreciating by 1.45% to close the month at R18.65/USD, ongoing domestic fiscal challenges will continue to exert pressure on the local currency as well as bond yields, given the rising fiscal debt. Vigilance in monitoring these dynamics is crucial for navigating the economic landscape ahead.