Local & International Outlook
All eyes on the Fed and SA’s MPC
The two big events to look out for in May — other than the possibility that Moody’s could join Fitch and S&P in downgrading SA’s credit rating — are the US Federal Reserve’s May meeting, followed at the end of the month by SA’s third monetary policy committee (MPC) meeting of the year. First up will be the federal open market committee (FOMC) meeting on May 2-3. In March the Fed raised rates by a further 25 bps, taking the target range to 0.75%-1%. It was only the third time since the 2008/2009 recession that the Fed had raised rates. Most Fed officials expect the central bank to raise rates at least two more times this year. At the time of writing in mid-April, the Fed fund futures market was pricing in only a 13% chance that the FOMC would hike its policy rate in May. The odds of a June Fed hike were almost 70%, with the likelihood of two or more hikes by the year-end at 53%.
The most recent US economic data suggests there has been some improvement in US economic activity, i...
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