Market keeps eye on MPC rate decision this week

IT WAS AN interesting week with the JSE All Share index hitting 100 000 points on Wednesday morning and the gold price breaking through $3 400 an ounce again. Internationally, US President Donald Trump announced trade deals with Japan and with the Philippines, and there are reports that the EU and US are nearing a deal.

- WALDO KRUGELL

In local news the Government of National Unity held together once more as the DA agreed to support the Appropriation Bill after President Cyril Ramaphosa dismissed Higher Education and Training Minister Nobuhle Nkabane. On Thursday, Trade, Industry, and Competition Minister Parks Tau said that a “condition precedent document” has been signed as a precursor to finalisation of the trade negotiations with the US, but little details were available. It was reported that the Framework Deal aims to resolve longstanding market access issues that both sides are interested in and to promote bilateral investments in a mutually beneficial manner. It is unlikely that South Africa and the US will reach an agreement by the 1 of August, when 30% tariffs kicks-in.

The key local indicator was the June Consumer Price Index (CPI) inflation figure released on Wednesday. The inflation rate rose from 2.8% to 3%. The main driver was higher food prices, while lower year-on-year fuel prices helped to counter the increase. The inflation rate remains safely below the midpoint of the Reserve Bank's target band, and markets are still expecting one more 25 basis point cut to the repo rate this year. But will it happen at Thursday's Monetary Policy Committee (MPC) meeting?