Last week, disputes over the Strait of Hormuz persisted, with little tangible progress toward resolution. As a result, oil prices climbed back above $100 per barrel. Locally, South Africa’s annual inflation rate edged up to 3.1% in March from 3% in February.
International Market Developments
Last week, global investors remained focused on geopolitical tensions in the Middle East. Disputes over the Strait of Hormuz persisted, with little tangible progress toward resolution. Despite the United States extending the ceasefire, oil prices climbed back above $100 per barrel by midweek. For global markets, any ceasefire or tentative agreement is of limited significance unless safe shipping through the Strait can be restored. At present, both sides continue to disrupt maritime traffic, each appearing confident of maintaining the upper hand. This dynamic heightens the risk of further escalation and may also hinder de-escalation, as neither side shows a willingness to concede ground.
The Trump administration’s criminal investigation into Federal Reserve Chair Jerome Powell was abruptly dropped last Friday, potentially easing the path for Kevin Warsh to secure Senate confirmation as his replacement given that Republican Senator Thom Tillis had warned he would block the nomination unless the probe was abandoned. The investigation, officially linked to construction cost overruns, was widely criticised as a politicised move by the United States Department of Justice under Donald Trump, amid his public pressure on the Fed to cut interest rates. Powell has indicated he will remain on the Board of Governors until the matter is resolved with “transparency and finality,” and it remains unclear whether the probe’s termination satisfies that condition. Concerns persist, with Elizabeth Warren noting that U.S. Attorney Jeanine Pirro has left open the possibility of reopening the case, alongside a separate investigation into another Fed governor.
Looking ahead, the US Federal Reserve (Fed) is scheduled to meet on Wednesday. The Fed is widely expected to keep rates unchanged. Investor’s attention will mostly be on forward guidance.
Local Market Developments
Last week, STATSA published the CPI data for March. Annual consumer inflation (CPI) edged higher to 3.1%, up from 3.0% in February and broadly in line with expectations. The primary driver was housing and utilities, which rose 5.1% year-on-year. Food and non-alcoholic beverages increased by 3.6% year-on-year, partly reflecting higher meat prices (+11.6% year-on-year) due to the foot-and-mouth disease outbreak. On a monthly basis, CPI rose 0.6% in March, compared to 0.4% in February. Housing and utilities again led the increase (0.8% month-on-month, contributing 0.2 percentage points). Despite elevated global oil prices, local fuel costs rose only modestly (+1.2% month-on-month), reflecting South Africa’s lagged, regulated pricing mechanism. However, fuel price hikes implemented on 1 April point to a sharper rise in inflation ahead. While the fuel levy relief will partially offset the impact, the inflation trajectory for the rest of 2026 will depend on whether this support is extended.
Looking ahead, the leading business cycle indicator are due for release on Tuesday. The data will provide a sense of underlying momentum following February’s 0.4% month-on-month increase.