All eyes on Central Banks and policy interest rate decisions in the coming weeks as the timing and pace of rate cuts will be in the spotlight. Locally, the Springboks get the job done. GO BOKKE!
International Market Developments
Last week, Fed Chair Powell, speaking at the Jackson Hole Economic Symposium, made it clear that the ‘time has come for policy to adjust’. He signaled that the time has arrived for the US interest rate cutting cycle to begin, though he did highlight that the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.
The data suggested that there is a growing concern from the committee over the weakness of the US labour market. The unemployment rate has risen at a rate that has raised recession fears, even though the data is not yet flashing red. A further deterioration in the labour market could steer the FOMC into more aggressive easing to avoid substantial economic weakness. Markets will be keen to hear the Fed’s assessment of US inflation trends, downside risks facing the economy and any clues the Fed might give about the speed of future interest rate declines which are highly likely to start at the FOMC’s next meeting on 18 September.
Local Market Developments
Meanwhile locally we are celebrating the victory of the Boks over New Zealand.
Business and government collaboration remains central to the government’s efforts to rebuild SA’s infrastructure (Energy, Transport, and Logistics) and address crime and corruption. President Ramaphosa recently highlighted the state’s commitment to urgently implement the (collaboration’s) reform agenda, seeking to restore confidence and sentiment-essential drivers of investment, inclusive economic growth, and job creation. So far, progress has been uneven in the three areas, with progressive achievements in halting load shedding (as capacity has increased) and rapidly working through grey-listing deficiencies, but Transport/Logistics reform remaining behind schedule. The Presidency has noted that energy and logistics have been the largest constraints on economic growth over the past few years.
Headline producer price inflation (PPI) declined by -0.2% m/m in July, easing to 4.2% y/y when measured on a year-on-year basis. The result was lower than the consensus expectations of 4.5% y/y on the back of fuel price cuts in July.