Rampant global inflation and rising interest rates may be the hot topic in financial markets but bond analysts say the potential negative effect of aggressive monetary tightening on SA’s economy could force local policymakers into a rates rethink.

While money market futures, which are used by traders to gauge the trajectory of future interest rates, suggest the Reserve Bank could raise its repo rate from 4.75% now to close to 7% in six months and around 7.75% in a year, fixed income analysts say those expectations are way too aggressive. One is even predicting that the impact of a possible US recession on a domestic economy already suffering from persistent power shortages could force SA policymakers to start reversing course on rate hikes as soon as the middle of 2023...

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