Latest news with #LesetjaKganyago
IOL News
6 days ago
- Business
- IOL News
This is what June's inflation results mean for your pocket and trolley
June's inflation data revealed a rise to 3.0%, up from 2.8% in April and May, signalling a shift that could hit both consumers and portfolios. While fuel prices are easing, grocery bills are climbing fast, with food inflation at a 15-month high of 5.1%. Image: Squirrel photos/Pixabay After maintaining stability at 2.8% in April and May, South African inflation experienced a notable rise in June, aligning with projections from economists and signalling new considerations for the SA Reserve Bank ahead of its upcoming interest rate review. What does it mean? Your grocery basket is more expensive – Meat, fruit, and vegetables are driving food inflation – Meat, fruit, and vegetables are driving food inflation Fuel relief is real – but might not last – Prices are down now, but oil market risks loom – Prices are down now, but oil market risks loom Interest rate outlook in question – SARB's next move could affect loan repayments, mortgages, and household budgets – SARB's next move could affect loan repayments, mortgages, and household budgets Trade wars and tariffs could make things worse – Global instability could hit SA's agricultural and automotive sectors The annual consumer price inflation recorded a 3.0% increase, while the Consumer Price Index (CPI) rose by 0.3% month-on-month, reflecting the complex dynamics within the nation's economy. Despite remaining close to the lower threshold of the South African Reserve Bank's (SARB) inflation target range of 3% to 6%, the increased rate raises concerns. The heightened inflation is now driven primarily by the food and non-alcoholic beverages sector, which saw its annual rate soar to a 15-month high of 5.1% in June. Within this category, meat, particularly beef, emerged as a significant contributor to the food inflation spike, alongside other unprocessed food items. This upward trend is compounded by fruits and nuts, and vegetables maintaining double-digit inflation rates for the second consecutive month. Interestingly, while food costs escalated, fuel prices have continued their decline, marking a fourth month of reduced prices. The cost of fuel is currently on average 11.2% lower than it was a year ago, providing some respite amid rising food costs. Delving deeper, the annual inflation rate for goods surged to 2.3%, an increase from 1.8% in May, whereas the service sector received a slight boost as its inflation rose to 3.7% from 3.6% the previous month. South African Reserve Bank chief Lesetja Kganyago has expressed concerns regarding external factors, most notably the depreciation of the US dollar due to potential tariffs and deflationary pressures emanating from China. These challenges pose significant risks to the local inflation landscape and broader economic activity. Kganyago highlighted that if tariffs are imposed, sectors such as agriculture and automotive could suffer, further stressing South Africa's economic framework. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ The prevailing uncertainty in the economic landscape has resulted in mixed expectations among economists concerning the decisions of South Africa's Monetary Policy Committee (MPC) during its upcoming rate-setting meeting. Earlier this year, the bank has already implemented two cuts to the repo rate, the latest occurring in May. While some analysts advocate for the continuation of this easing cycle, arguing that inflation has remained consistently low, others believe the committee may choose to maintain the current rates in light of potential volatility. IOL
IOL News
7 days ago
- Business
- IOL News
South African market resurgence new opportunities for traders
South Africa's financial markets are entering a pivotal phase marked by renewed political clarity, structural reform, and increasing global relevance. But as headline risks like US tariffs, rand volatility, and the upcoming G20 summit take centre stage, local retail traders are presented with not only greater opportunity, but more complexity. Against this backdrop, choosing the right trading partner becomes an essential decision - one that can define not just how you trade, but how well you respond to a market in transformation. Political stability and fresh optimism Since the formation of South Africa's new Government of National Unity in 2024, investor sentiment has meaningfully shifted. Markets have rallied, the longstanding 'SA discount' has narrowed, and policy momentum is driving a new level of optimism. Structural reforms aimed at restoring 3% GDP growth are gaining traction, and both domestic and international investors are beginning to reprice the South African opportunity. This renewed confidence is visible not only in equity performance but also in trade volumes across bonds and listed instruments. South Africa remains one of the few global markets where price formation still occurs primarily on-book, on-exchange; an essential feature of a healthy, transparent market ecosystem. The robustness of this infrastructure, supported by a deep institutional backbone, gives retail traders a rare level of access to clean price discovery and liquidity. South Africa is no longer merely a domestic trading hub; it is actively transforming into a globally relevant platform. With its advantageous time zone, regulatory frameworks increasingly aligned with international standards, and the rise of dual listings, the country is well positioned to serve both local and international traders. What sets this evolution apart is its ability to embrace innovation and global relevance without compromising the pragmatic resilience of its foundational ecosystem. Global trade and G20 pressures South Africa is hosting the G20 finance chiefs in Durban this November, placing it at the forefront of global economic discourse. Global uncertainty however still looms large, with President Trump having announced 30% tariffs on South African exports starting August 1, potentially impacting up to 100,000 jobs in the agriculture and automotive sectors. South African Reserve Bank (SARB) Governor, Lesetja Kganyago, has called for increased intra-African trade amidst the tariff wars. This volatility means one thing for South African traders—opportunity is rife, risk management is imperative, and robust infrastructure is a must. While global markets rush to implement changes like T+1 settlement, South Africa retains the flexibility to adopt reforms deliberately, with the depth and resilience to remain stable amid shifts. All of this makes South Africa one of the most exciting emerging markets today, but also one of the most nuanced. That's why the role of a trading partner becomes more than transactional. It becomes strategic. How to unlock long-term success In today's increasingly sophisticated trading landscape, local traders are no longer just participants but strategic actors navigating a dynamic intersection of global opportunity and local nuance. Choosing the right trading partner is no longer a matter of convenience; it's a critical decision that can define long-term success. Selecting the ideal partner begins with seeking out a firm that combines global-grade technology with deep local insight, underpinned by a compliance-first mindset aligned with FSCA regulation. A robust platform should do more than facilitate transactions. It should unlock access to JSE-listed equities, global indices, currencies, and commodities through a secure, intuitive interface. For traders seeking to hedge effectively without amplifying risk, the ability to trade in ZAR is not just a feature, it's a strategic advantage that mitigates currency exposure, often overlooked by global-first platforms. But access alone is not enough. In a market shaped by structural shifts, SARB rate decisions, and geopolitical volatility, traders need more than tools—they need clarity. A partner that delivers timely insights, actionable strategies, and a commitment to education empowers traders to make informed decisions with confidence. Whether you're entering the market or scaling your strategy, resources like a dedicated education hub and deep research coverage provide a learning edge that evolves with your ambitions. Above all, trust is the cornerstone of sustainable trading. In a market re-engaging with global capital, traders need a partner rooted in local credibility. This includes FSCA oversight, on-the-ground support, and a nuanced understanding of South Africa's regulatory and trading environment. It's a level of support that can provide traders with the assurance they need to grow and succeed. South Africa's financial future looks increasingly optimistic. The yield story remains strong. Foreign capital is returning. The market is diversifying. And with more listings and deeper liquidity, retail traders can now operate with a confidence that wasn't possible just a few years ago. But as the opportunity expands, so too does the need for precision, discipline, and guidance. In this moment of change, a strong trading partner isn't just a convenience—it's a competitive advantage. In a market defined by complexity and opportunity, that distinction matters. Because in South Africa's new market reality, the real advantage lies in who stands beside you, not just what stands in front of you.
IOL News
7 days ago
- Business
- IOL News
Economist cautions against interest rate hikes amid economic uncertainty
South African Reserve Bank (SARB) governor Lesetja Kganyago has strongly advocated for the country to lower its inflation target from 4.5% to 3%. Image: Thobile Mathonsi / Independent Newspapers South African Reserve Bank (SARB) governor Lesetja Kganyago has strongly advocated for the country to lower its inflation target from 4.5% to 3%. Experts argue that a lower inflation target would improve price stability, reduce borrowing costs and enhance investor confidence in the long term. However, many feel it would entail some short term 'pain' for the sake of long-term gain. Yet tightening monetary policy could be a dangerous move in the current economic climate, warns Frederick Mitchell, chief economist at Aluma Capital. The US says it intends to impose a 30% tariff on South African goods, with threats of a further 10% tariff targeting BRICS countries. This could plunge many industries into crisis. Industries that rely on exports, such as vehicles, citrus and mineral commodities, are particularly vulnerable. These sectors are already under stress and additional tariffs could hinder economic growth and exacerbate the country's already high unemployment rate of over 30%. Within this context, the SARB faces a constrained path, Mitchell said. 'Conventional wisdom suggests that raising interest rates can curb inflation, yet in the current environment, where inflation remains subdued but economic growth is threatened, tightening monetary policy may exact an economic toll without addressing the underlying trade issues,' Mitchell explained. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ As SARB Governor Lesetja Kganyago has noted, inflation is expected to remain within the target range, but global trade war uncertainties loom large. Higher tariffs and potential retaliatory measures could put a damper on South Africa's economic recovery. 'Increasing interest rates in such a fragile environment risks stifling growth further, especially as global economic slowdown cues stemming from China's potential slowdown and trade tensions compound the problem,' he added. 'Given that South Africa's economy is highly reliant on exports and sensitive to external shocks, the restrictive monetary stance could deepen recessionary pressures without equipping the economy to withstand the imminent trade disruptions.' Although the government's fiscal space remains limited, an over-reliance on monetary policy to counteract trade barriers would neither be prudent nor effective. Mitchell believes the focus should remain on defending economic stability through fiscal prudence and resistance to over-tightening monetary policy in relation to inflation. Furthermore, policymakers should prioritise diplomatic engagement and trade negotiations. 'While efforts to curb inflation are vital, the scope for interest rate hikes in response to global trade tensions and tariffs is limited. Such measures risk further slowing economic growth, increasing unemployment, and undermining investor confidence,' Mitchell said. 'A prudent approach would involve safeguarding industry competitiveness and fostering diplomatic solutions, recognising that the health of South Africa's economy hinges on resilient trade relations and sound fiscal management rather than aggressive rate hikes amid uncertain international conditions.' Get your news on the go, click here to join the Cape Argus News WhatsApp channel. Cape Argus
IOL News
22-07-2025
- Business
- IOL News
Given where the economy is, interest rate hikes could do more harm than good
A tighter monetary policy amid the current global uncertainty could worsen South Africa's economic situation. Image: RON AI South African Reserve Bank (SARB) governor Lesetja Kganyago has strongly advocated for the country to lower its inflation target from 4.5% to 3%. Although interest rates are currently on a downward trajectory, albeit following a cautious approach, there are fears that a lower inflation target would lead to a tighter monetary stance, potentially bringing an end to the current cutting cycle and possibly even leading to more hikes in the short term if inflation edges upward amid the current global economic uncertainty caused by Donald Trump's trade war. Experts argue that a lower inflation target would improve price stability, reduce borrowing costs and enhance investor confidence in the long term. However, many feel it would entail some short term 'pain' for the sake of long-term gain. Yet tightening monetary policy could be a dangerous move in the current economic climate, warns Frederick Mitchell, chief economist at Aluma Capital. The US says it intends to impose a 30% tariff on South African goods, with threats of a further 10% tariff targeting BRICS countries. This could plunge many industries into crisis. Industries that rely on exports, such as vehicles, citrus and mineral commodities, are particularly vulnerable. These sectors are already under stress and additional tariffs could hinder economic growth and exacerbate the country's already high unemployment rate of over 30%. Within this context, the SARB faces a constrained path, Mitchell said. 'Conventional wisdom suggests that raising interest rates can curb inflation, yet in the current environment, where inflation remains subdued but economic growth is threatened, tightening monetary policy may exact an economic toll without addressing the underlying trade issues,' Mitchell explained. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ As SARB Governor Lesetja Kganyago has noted, inflation is expected to remain within the target range, but global trade war uncertainties loom large. Higher tariffs and potential retaliatory measures could put a damper on South Africa's economic recovery. 'Increasing interest rates in such a fragile environment risks stifling growth further, especially as global economic slowdown cues stemming from China's potential slowdown and trade tensions compound the problem,' he added. 'Given that South Africa's economy is highly reliant on exports and sensitive to external shocks, the restrictive monetary stance could deepen recessionary pressures without equipping the economy to withstand the imminent trade disruptions.' Although the government's fiscal space remains limited, an over-reliance on monetary policy to counteract trade barriers would neither be prudent nor effective. Mitchell believes the focus should remain on defending economic stability through fiscal prudence and resistance to over-tightening monetary policy in relation to inflation. Furthermore, policymakers should prioritise diplomatic engagement and trade negotiations. 'While efforts to curb inflation are vital, the scope for interest rate hikes in response to global trade tensions and tariffs is limited. Such measures risk further slowing economic growth, increasing unemployment, and undermining investor confidence,' Mitchell said. 'A prudent approach would involve safeguarding industry competitiveness and fostering diplomatic solutions, recognising that the health of South Africa's economy hinges on resilient trade relations and sound fiscal management rather than aggressive rate hikes amid uncertain international conditions.' IOL Business
Eyewitness News
22-07-2025
- Business
- Eyewitness News
Kganyago calls for emerging markets, developing countries to address insurance protection gap
JOHANNESBURG - South African Reserve Bank (SARB) governor Lesetja Kganyago has called for emerging market and developing economies to urgently address the widening insurance protection gap in the face of growing natural disasters. The calls from Kganyago and other central bank governors come amid an alarming increase in natural catastrophes, including hurricanes, typhoons, wildfires, and floods across the world. ALSO READ: SARB's Kganyago says global debt crisis had shifted into a new paradigm South Africa is among countries recently devastated by deadly floods, with more than 400 lives lost in KwaZulu-Natal in 2022 and 100 lives claimed in June's floods in the Eastern Cape. Climate action, financing, and insurance gaps are on the agenda at the G20 finance track meetings currently underway in KZN on Friday. Kganyago addressed some delegates on the matter on the sidelines. 'For central banks, policymakers, and supervisors, bridging this protection gap is part of building macro financial resilience.' President of the World Bank Group Ajay Banga said the cost of uninsured losses in natural disasters ends up on the public balance sheet as debt. 'Insurance can help but for insurance to work, high quality development is a necessary precondition. It simply cannot function in the face of poor infrastructure, unreliable data or chronic underinvestment. Without that foundation, insurance premiums would just be too expensive.'
