Traders scaled back their bets on further South African interest rate increases after a US-Iran peace deal sent oil prices tumbling, BusinessTech reported on 15 June 2026, citing Bloomberg data. The drop in oil prices could ease inflationary pressure in the country, the report said.
Forward-rate agreements priced in 15 basis points of tightening for the South African Reserve Bank's Monetary Policy Committee meeting on 23 July, down from 30 basis points a week earlier. For 2026 as a whole, pricing pointed to 32 basis points of hikes, compared with 70 basis points a week before, implying roughly one quarter-point increase by the November meeting.
INFLATION EXPECTATIONS EASE
Market measures of expected inflation also moved lower. The five-year breakeven inflation rate fell 16 basis points to 4.23% following the peace agreement.
The Reserve Bank raised its repo rate by 25 basis points to 7% in May, its first increase in three years. The Monetary Policy Committee voted 4-2 for the move, with two members favouring leaving rates unchanged. At the time, Governor Lesetja Kganyago flagged weather conditions as another risk to inflation alongside the war in Iran.
Consumer inflation for May was expected at 4.7%, up from 4% in April, with some economists anticipating a reading as high as 5.1%. The central bank targets inflation of 3%.
The Reserve Bank has set out three scenarios for future interest rates: a prolonged crisis in the Middle East, El Niño-driven drought, and non-linear economic shocks. All three implied higher inflation and lower growth, and showed some additional monetary policy tightening.