South Africa’s 10-year government bond yield climbed to about 8.33%, rebounding from an over one-month low of 8.19% reached on April 17, as renewed hostilities in the Middle East drove oil prices sharply higher and intensified inflation concerns. Iran reimposed a closure of the Strait of Hormuz following an escalation in tensions over the weekend, and US forces later struck an Iranian cargo vessel that attempted to breach the blockade.
At the same time, South Africa’s central bank governor told Reuters that the volatility stemming from the conflict, and its knock-on effects on inflation, has complicated the outlook for near-term interest rate cuts. With inflation currently hovering near the lower end of the South African Reserve Bank’s target range, policymakers are weighing whether the recent period of price stability is likely to continue or be undermined by external shocks in the coming months.
Economists now broadly expect interest rates to be kept on hold through 2026, with no cuts forecast, while leaving the door open to possible further hikes if inflationary pressures intensify.
