Price Pressures Ease But Bets Still on for South African Rate Hike
Photographer: Waldo Swiegers/Bloomberg
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The oil price plunge and a strengthening rand have pushed inflation expectations for South Africa down to levels last seen in August, but traders aren’t abandoning bets on an interest-rate increase next week.
The five-year break-even rate, seen as a gauge of bond investors’ expectations for price increases over the period, fell 3 basis points on Thursday to 5.57 percentage points. Even so, forward-rate agreements, used to speculate on policy moves, are still giving 60 percent odds on a 25 basis-point hike on Nov. 22.