Interest-rate traders moved to price in a chance of a South African interest-rate hike later this month as the Iran conflict pushed oil prices higher, reviving concerns about inflation.<\/p>\n
Forward-rate agreements are now anticipating a rate increase of six basis points at the March 26 policy meeting, or a 24% chance of a 25-basis-point hike. As recently as Friday, they were pricing in almost a 30% chance of a quarter-point cut.<\/p>\n
Read: Iran war oil shock threatens to disrupt Africa\u2019s easing cycle<\/p>\n
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The market is also less confident of monetary easing over the rest of the year. It\u2019s now pricing in just 15 basis points of easing by year-end, compared with 39 basis points on Friday.<\/p>\n
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Brent crude oil rose above $80 a barrel on Tuesday as the US and Israel stepped up their attacks against Iran. That risks pushing inflation in South Africa further away from the central bank\u2019s 3% target. The weakening rand could add to price pressures.<\/p>\n
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Policy makers \u201cwould most likely look through this if it\u2019s a temporary shock, and not raise rates,\u201d said Annabel Bishop chief economist at Investec Bank. Persistently higher inflation, however would force the central bank to tighten, though that is a \u201csevere down case\u201d scenario, she said.<\/p>\n
The rand extended declines on Tuesday, weakening 1.2% to R16.29 per dollar as of 12:05 p.m. in Johannesburg. That brings its two-day drop to 2.2%.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n