US core personal consumption inflation for October remained elevated at 2.8% y/y, despite relatively high interest rates, suggesting that the US Federal Reserve (Fed) does not have to be in a hurry to take interest rates significantly lower. We expect that the extent of further US interest rate cuts will be determined by trends in inflation data and the strength of the US economy.

SA’s producer price inflation (PPI) has fallen from 4.7% at the beginning of 2024 to -0.7% y/y in October, largely as a result of lower fuel prices. Together, PPI and CPI data show SA’s inflation is under control, and it could be argued that the South African Reserve Bank should be more aggressive in cutting interest rates. However, this is a very conservative central bank and we expect it will only continue to cut by 25 bps at each meeting in the first half of 2025.

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