SA’s inflation slows more than expected while US Fed flags looming rate cuts

SA’s headline Consumer Price Inflation (CPI) rate for July was surprisingly subdued, slowing to 4.6% from 5.1% in June. This reflects a slightly lower than expected electricity tariff hike and a slowdown in food price increases, as well as fuel price cuts. The slowing inflation trend makes it more likely that the SA Reserve Bank will start to cut interest rates in September.
In the US, signals from the Federal Open Market Committee and Federal Reserve chairman Jerome Powell indicate more confidence that inflation is trending downwards. It has also become clear that the US labour market is weakening. The longer the Fed waits to cut rates, the greater the risk that the economy will go into recession. STANLIB expects the Fed will implement a series of gradual interest rate cuts, starting in September and continuing into 2025. Click here to listen to the podcast.