Global inflation is still sticky

Although some countries have seen inflation starting to turn downward, as we can see from the chart, the bulk of the countries' worldwide inflation is still in an uptrend (blue line), with the inflation only down slightly, depicted by the white line. Our local inflation came out higher than expected today, and the UK's inflation printed above 10% for the 7th month in a row. Inflation seems to be like toothpaste, easy to get out but a little tricky to put back in. The higher inflation is continuing to place pressure on global liquidity. The problem is that central banks cannot push interest rates higher as this leads to other consequences like company insolvencies. So we will need to see how long interest will remain high before rate cuts come into play.

Rand trades better

The constrained global liquidity does not help an emerging market currency like the rand. Throw into the mix our own issues like load shedding, and we can see why the rand is one of the worst-performing currencies in 2023. For now, the rand seems stuck between R18.00 and R18.50, although we had a better day recovering from R18.30 early on to trade back around R18.10.

#Inflation #TreasuryONE #ZAR #Liquidity