A lowering of the South Africa’s inflation target is being hotly debated among policymakers and we are now factoring in a change to the target, from 3-6% now to 3±1%, into our forecasts. The Reserve Bank is unlikely to have a problem meeting the new target and it should be able to cut interest rates further, and by more than most expect. All of that would help to bring down local currency bond yields; we now think the 10-year yield could fall by nearly 200bp, to 8.00%, by end-2026. That will provide only modest relief to the public finances in the near-term, but it could have a significant longer-term impact.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services