South Africa’s 10-year bond yield climbed to around 9.1% as global risk appetite remained subdued ahead of the cease-fire deadline set by US President Trump. Now in its sixth week, the war in the Middle East has heightened tensions, with Trump warning that Iranian civilian infrastructure could be targeted if the Strait of Hormuz remains closed beyond his deadline.
Inflation concerns stay elevated amid an exceptionally uncertain geopolitical backdrop and ongoing disruptions to energy supplies, with the prospect of further interest rate increases reinforcing market caution. For energy-importing South Africa, a prolonged conflict and rising oil prices risk amplifying inflationary pressures. At the same time, the country’s reliance on imported fertilizers leaves the agricultural sector exposed to global price spikes, which could filter through to higher food prices.
Against this backdrop of persistent inflationary pressure linked to global oil prices and geopolitical developments, the South African Reserve Bank decided in March to keep its benchmark interest rate unchanged at 10.25%.
