{"id":62739,"date":"2024-03-14T16:52:11","date_gmt":"2024-03-14T16:52:11","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa"},"modified":"2024-03-14T18:28:21","modified_gmt":"2024-03-14T18:28:21","slug":"interest-rate-trouble-for-south-africa","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa","title":{"rendered":"Interest rate trouble for South Africa"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>Markets shifted into a far more optimistic space earlier this week after US Fed Chair Jerome Powell indicated that US interest rate cuts are still likely for this year \u2013 and not necessarily far off.<\/p>\n

However, the mood soured after inflation data from the states saw prices rise sharper than expected, dimming prospects of the Fed cutting interest rates any time soon.<\/p>\n

While US interest rate cuts are not necessarily directly tied to South Africa\u2019s cuts \u2013 with the South African Reserve Bank stating on more than one occasion that it looks at a variety of factors to determine policy direction \u2013 local rate moves tend to follow the US, as the latter has a wide impact on the global economy.<\/p>\n

For South Africa, there is consensus among economists and analysts that interest rates have peaked, but given the sticky levels of inflation in the US and back home, there are big questions about when the cycle will turn, and the SARB will start cutting.<\/p>\n

According to Investec chief economist Annabel Bishop, South Africa is only expected to see rate cuts in the second half of the year \u2013 after the US has started its cutting cycle.<\/p>\n

At the start of the year, the turn was expected closer to the middle of the year, but with each new delay in the US, this target has been shifted further back.<\/p>\n

The positive sentiment from Powell earlier this week boosted the rand and brought it below the R19.00\/$ level off the hopes of a speedier move to rate cuts.<\/p>\n

\u201cMuch depends on the US for the rand, and Fed Chair Powell\u2019s comments in the US have had a marked effect on the domestic currency, with US rate cuts likely driving it to R17.00\/USD and below, particularly on domestic economic structural improvements,\u201d Bishop said.<\/p>\n

The latest inflation data, however, has dampened this, as reflected in the weaker rand on Wednesday and a weaker gold price, with the latter rallying on the positive rate-cut sentiment earlier in the week.<\/p>\n

According to PSG Wealth, the US Federal Reserve is now in a difficult position. \u201cIf they cut rates prematurely, they risk letting the inflation genie out of the bottle, but if they keep rates too high for too long, it could result in more severe economic pain downstream,\u201d the group said.<\/p>\n

\u201cThe question for us now is \u2013 what will constitute a policy error? Is it slowing interest rates in three, six or 12 months? We will continue to monitor the Fed\u2019s actions and take appropriate steps when needed.\u201d<\/p>\n

Powell indicated that US rates are unlikely to come down until the Fed has gained \u201cgreater confidence that inflation is moving sustainably toward 2%\u201d. The latest CPI print in the US was 3.2%, higher than the 3.1% expectations.<\/p>\n

In South Africa, the central bank has made similar statements, saying rates won\u2019t come down until local inflation is comfortably and sustainably in the mid-point of its target range (4.5%). This is only expected to be achieved near the end of the year.<\/p>\n

Expectations from fund managers in South Africa paint a worrying picture for interest rates, with many now expecting further delays to the cutting cycle.<\/p>\n

According to the latest Bank of America (BofA) South Africa Fund Manager survey, despite an improved core inflation outlook for the country, more fund managers have delayed their expectations of when the South African Reserve Bank will cut interest rates.<\/p>\n

A net 67% now expect the first repo rate cut in Q3 2024, with the remaining 33% expecting a cut in Q2 2024.<\/p>\n

In January, the figures were inversed, with a net 67% expecting the first rate cut in Q2 2024.<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. Markets shifted into a far more optimistic space earlier this week after US Fed Chair Jerome Powell indicated that US interest rate cuts are still likely for this year \u2013 and not necessarily far off. However, the mood soured after inflation data from the states saw prices rise sharper than expected, dimming […]<\/p>\n","protected":false},"author":84,"featured_media":62738,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[274,315,275],"class_list":["post-62739","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nInterest rate trouble for South Africa - South Africa<\/title>\n<meta name=\"description\" content=\"Markets shifted into a far more optimistic space earlier this week after US Fed Chair Jerome Powell indicated that US in ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Interest rate trouble for South Africa\" \/>\n<meta property=\"og:description\" content=\"Markets shifted into a far more optimistic space earlier this week after US Fed Chair Jerome Powell indicated that US in ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-14T16:52:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-03-14T18:28:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/03\/sm_1710427921.115926.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Interest rate trouble for South Africa\",\"datePublished\":\"2024-03-14T16:52:11+00:00\",\"dateModified\":\"2024-03-14T18:28:21+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa\"},\"wordCount\":617,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/03\/sm_1710427921.115926.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"files\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/interest-rate-trouble-for-south-africa\",\"name\":\"Interest rate trouble for South Africa - 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