South Africa’s 10-year bond yield hovered around 8.90%, near its highest level since late October 2025, as ongoing geopolitical tensions continued to weigh on investor sentiment. The broader economic outlook is being clouded by global risks, particularly the conflict in the Middle East and its repercussions for energy prices and inflation.
At the beginning of the year, South Africa’s macroeconomic picture had been gradually improving, with easing inflation, progress on fiscal consolidation, and markets increasingly pricing in the prospect of further monetary policy loosening. However, the escalation of hostilities in the Middle East has driven oil prices sharply higher, raising doubts over the feasibility of achieving the South African Reserve Bank’s 3% inflation target this year.
A sustained increase in oil prices could push inflation higher just as policymakers seek to anchor expectations closer to the SARB’s target. The central bank is scheduled to meet on 26 March and is widely expected to leave interest rates unchanged.
