South Africa’s 10-year bond yield extended its decline toward 8.55%, the lowest level since April 22, supported by improved global risk sentiment on expectations of a potential US–Iran agreement. President Trump indicated that a deal involving the US, Iran, and several regional countries had been “largely negotiated” and was awaiting finalization, while stressing that the process should not be rushed.
On the domestic front, South Africa received its first positive outlook revision from Moody’s Ratings since 2007, with the agency citing an improving fiscal position and a renewed commitment to structural reforms. Attention now turns to the SARB’s policy meeting on May 28, which could deliver the first interest rate hike since May 2023.
Headline inflation accelerated to 4% in April from 3.1% in March, driven in part by mounting price pressures linked to developments in the Middle East, and is expected to rise further in the near term. The SARB is widely expected to raise rates by 25 basis points to counter potential second-round effects from fuel-induced inflation, although policymakers may still opt to keep rates on hold.
