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SARB Shows Concern On Inflation Expectations, Breakevens +56-78bp in August

SOUTH AFRICA
  • S.AFRICA M/T CPI FORECAST IMPLIES NEED FOR POLICY NORMALIZATION
  • S. AFRICA'S SARB SEES 2021-22 BUDGET DEFICIT AT 6.5% OF GDP
  • SARB: DELAYING RATE HIKES COULD DESTABILIZE CPI EXPECTATIONS
  • SARB: COMMODITY PRICE DROP MAY PUT S.AFRICA FISCAL PATH AT RISK
  • In terms of inflation expectations, the rise in oil prices has seen a sharp rise in inflation breakevens across the curve
  • Since 01 Sept: 5Y B/E +56bp, now trading above 5.00 While the 10Y B/E stands +78.55bp higher at 6.45
  • In terms of the commodity price drop - yes, the decline in commodity prices has seen SA's terms of trade diminished, reducing future mining profit windfalls, but the current account surplus still remains robust, although this is expected to continue to narrow into 2022
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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