Fixed Income Chart Book: 2 July 2015

Expect interest rate hikes to start soon

South Africa’s current account deficit is still significant, and this is contributing to persistent rand weakness in the absence of foreign portfolio inflows. With inflation heading much higher in months to come, the time for interest rate hikes is upon us. The Argon Fixed Income team expects a 0.25% hike in July.

Chart 1: The local current account deficit narrowed slightly

  • The current account deficit narrowed from 5.1% of GDP in the fourth quarter of last year to 4.8% of GDP in the first quarter of 2015, which is better than the consensus estimate of 5.1%.