Insights

Global bonds have come under renewed pressure, with falling prices and rising yields. There is disagreement over what is driving the turmoil, but the net result is higher borrowing costs for governments and corporations. Against this messy backdrop, the Reserve Bank decided to raise its policy rate for the second time this year.

The US Federal Reserve raised its policy interest rate last week. While inflation has been above the Fed's target for five years already, the timing of the decision is largely down to big bond market moves in recent weeks. While the hiking cycle is likely to be shallow, it is nonetheless a time when markets can be volatile as a new rates reality is priced in.

Renewed global fuel price increases will put downward pressure on the South African economy. It means that the expected acceleration in growth will be postponed. However, it is still likely to happen as important reforms to improve the investment climate are being implemented.