Efficient Research – Inflation Worries

The JSE all share closed 0.79% in the red yesterday (32 208.96), dragged down by a worsening inflation outlook and softer commodity prices.  The Consumer Price Index excluding interest on mortgage bonds, namely CPIX, increased 10.4% (y:y) in April – higher than the market’s expected 9.9% y:y rise.  The Governor of the Reserve Bank, Mr. Tito Mboweni, gave a strong warning to the market yesterday, saying that interest rates might be increased with as much as 200 basis points at the next MPC meeting in June.  Although we do not anticipate this to happen, the possibility of a 100 basis point hike is on the rise. Read more