South Africa’s 10-year government bond yield hovered around 7.92%, near its lowest level since March 2015, underscoring growing investor confidence in the country’s economic fundamentals. Consumer inflation eased to 3.5% in January 2026 from 3.6% in December, reinforcing the view that price pressures may have peaked and that inflation could gradually converge toward the new 3% target.
Although this trend creates room for monetary policy easing, the South African Reserve Bank (SARB) is likely to maintain a cautious stance in light of a fragile global backdrop and lingering domestic inflation risks. Investor attention now turns to the forthcoming Budget speech in February 2025, where Finance Minister Enoch Godongwana is expected to reaffirm the government’s commitment to fiscal consolidation while setting out measures to underpin economic growth.
The 2026 Budget is widely expected to be market-friendly, supported by a windfall in tax revenues driven by recently surging commodity prices, which should provide additional fiscal space.
