Uncertainty around tariffs as markets digest a raft of economic data

THIS week there was significant uncertainty about the implementation of American President Donald Trump's 30% tariff on South African exports and in the end it was delayed by one week to August 7.

- WALDO KRUGELL

We also saw a major shift in our inflation targeting regime with the Reserve Bank announcing that future Monetary Policy Committee’ (MPC) decisions would be anchored around the lower bound of the 3-6% target band.

The indicators to keep an eye on were June PPI numbers, Absa and the Bureau of Economic Research’ Purchasing Managers Index, and new vehicle sales data for July.

At Thursday’s MPC meeting the repo rate was cut by 25 basis points by a unanimous decision. The repo now stands at 7% and the prime lending rate at 10.5%. In their statement the MPC said that the economic outlook is weak despite the uptick of economic activity inthe second quarter.

With possible higher US tariffs on South Africa, the MPC's growth projection is revised down from 1.2% to 1%. For the inflation outlook they mention that the rand has strengthened, and inflation expectations have moderated.