South Africa’s 10-year bond yield climbed above 8.65%, its highest level in more than two weeks, as ongoing geopolitical tensions in the Middle East and continued disruptions in the Strait of Hormuz dampened risk appetite. This move came despite new reports of a possible resumption of US–Iran talks and US President Trump’s announcement of a three-week extension to the ceasefire in Lebanon.
Domestically, South Africa’s inflation rate inched up to 3.1% in March from 3.0% in February, suggesting a possible turning point. The full impact of higher oil prices and broader global price pressures has yet to show up in consumer data, with steeper increases likely in the months ahead. Policymakers are increasingly concerned about potential second-round effects, in which businesses raise prices and workers push for higher wages, heightening the risk that inflation becomes entrenched and expectations drift upward. Governor Lesetja Kganyago has recently warned that the central bank is prepared to act if price pressures intensify.
