South Africa’s 10-year bond yield has climbed back to around 9%, signaling a more cautious stance among investors as renewed uncertainty around the Iran conflict weighs on sentiment. A new wave of strikes, combined with mixed messages from the US and Iran over potential negotiations to end the Middle East conflict, continues to stoke concerns about global growth and inflation.
Markets are increasingly worried that a prolonged war and higher oil prices could drive inflation higher in energy-importing South Africa. In addition, the country relies heavily on imported fertilizers, leaving the agricultural sector exposed to global price spikes that could feed through into higher food prices.
Against this backdrop, attention is turning to the South African Reserve Bank’s upcoming policy meeting, the second of the year, where interest rates are widely expected to be kept on hold amid elevated risks. South Africa’s headline inflation eased for a second consecutive month to 3% in February, aligning with the central bank’s new target, but it is expected to edge higher in the months ahead.
