Last week, Andy Burnham became the UK’s seventh Prime Minister in ten years, while Brent crude surged as the US–Iran conflict intensified and Houthi attacks disrupted Red Sea shipping, briefly pushing prices above US$100/bbl. Locally, the South African Reserve Bank’s Monetary Policy Committee surprised markets by leaving the policy rate unchanged at 7% on 23 July, sending the rand sharply weaker.
International Market Developments
UK markets absorbed both global tensions and a domestic political shift as Andy Burnham took office and appointed John Healey as Chancellor. Early fiscal measures — VAT relief on electricity, a £2 bus fare cap and support for hospitality — kept gilt moves contained. Data were upbeat: retail sales volumes climbed 4.2% year-on-year in June, well above expectations; the GfK Consumer Confidence Index jumped to –17 from –23, its highest since January; and the PMIs strengthened, with manufacturing at 52.8 and services rebounding to 51.8. Despite surging energy prices, the ECB held its deposit rate at 2.25%.
Oil dominated as US strikes on Iran extended into a ninth day, the ceasefire broke down and the Houthis entered the conflict, attacking Red Sea shipping and Saudi infrastructure. Brent briefly crossed US$100/bbl — up roughly 40% this month — before easing towards US$90/bbl as strikes paused over the weekend and diplomacy resumed. Meanwhile, new US Section 301 tariffs took effect on imports from 60 economies at rates of 10–12.5%; South Africa faces the higher 12.5% rate, well below the 30% previously threatened, with several key agricultural exports exempt.
Local Market Developments
The SARB’s MPC kept the policy rate at 7% on 23 July, with four members backing the hold and two voting for a 25 basis point hike; the prime rate remains at 10.50%. With markets positioned for a hike after June CPI accelerated to 5% year-on-year (core: 4.1%) on surging fuel costs, the rand fell more than 2% to around R16.76/US$ and the 10-year yield rose 16 basis points to 8.96%.
The Bank nonetheless lowered its 2026 CPI forecast to 4.0% and lifted growth to 1.4%, while Governor Kganyago stressed that inflation remains too high, risks are to the upside and policy will be set to achieve 3% inflation over time. With two members already favouring a hike, the pause is not the end of the cycle and September remains a live meeting.