SA and US hold interest rates in uncertain environment
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Despite a subdued domestic inflation rate of 3.2% y/y in February, well below market expectations, the South African Reserve Bank (SARB) did not cut the policy interest rate, STANLIB Chief Economist Kevin Lings says. This decision probably reflected the SARB’s desire to bring inflation down sustainably to 3% and nervousness about global developments.
The US Federal Reserve (Fed)’s decision to hold interest rates was accompanied by a revision to its 2025 economic growth forecast down to 1.7% from 2.1% previously and a higher inflation forecast at 2.7% (from 2.5%). However, the Fed believes inflationary pressure from tariff hikes will be transitory. That indicates no need to raise interest rates - and the Fed may even be inclined to cut rates in the second half to prevent an economic slowdown, Kevin says.
The US Federal Reserve (Fed)’s decision to hold interest rates was accompanied by a revision to its 2025 economic growth forecast down to 1.7% from 2.1% previously and a higher inflation forecast at 2.7% (from 2.5%). However, the Fed believes inflationary pressure from tariff hikes will be transitory. That indicates no need to raise interest rates - and the Fed may even be inclined to cut rates in the second half to prevent an economic slowdown, Kevin says.
