This week brings two key interest rate decisions. The first comes from the FED on Wednesday, where the market is pricing only a 3.6% probability of a rate cut. As such, US interest rates are expected to remain unchanged at 3.75%, a view that is largely priced through until the July FOMC meeting where the first cut is anticipated.
However, the SARB follows on Thursday, with the market expecting a 25 bps cut at the MPC meeting, taking the repo rate from 6.75% to 6.50%. In line with this expectation, South Africa’s 2-year swap is currently priced at 6.32, while the 3-year is at 6.35.
