Last week, the U.S. Supreme Court struck down Donald Trump’s “Liberation Day” tariffs. Locally, CPI for January came in slightly higher than expected at 3.5% year-on-year (against expectations for a moderation to 3.4% year-on-year) from 3.6% in December.
International Market Developments
Last week, FOMC minutes of the January 27–28 meeting showed that policymakers voted 10–2 to keep the federal funds rate unchanged at 3.50–3.75%. Christopher Waller and Stephen Miran dissented, favouring a 25-basis-point rate cut. Discussions highlighted renewed concern about inflation dynamics, with several officials indicating that rates could still rise if inflation remains above the Federal Reserve’s 2% target. While participants broadly agreed that downside risks to employment have moderated, many judged the risk of more persistent inflation to remain elevated. The minutes also warned that easing policy prematurely amid high inflation readings could be interpreted as weakening the Fed’s commitment to its inflation objective. Since the meeting, officials have continued to emphasise that the resilience of the US economy allows the committee to remain patient before making further policy adjustments.
On Friday, the U.S. Supreme Court struck down Donald Trump’s “Liberation Day” tariffs in a 6–3 ruling, affirming a federal appeals court decision that the policy was unlawful. The decision, which included votes from two justices appointed by Trump, represents a major setback for one of his signature economic measures. Trump reacted angrily, publicly criticizing members of the court and alleging unspecified foreign influence. Despite the ruling, the administration signalled it had anticipated the outcome and is preparing to pursue tariffs through alternative legal authorities.
Looking ahead, US inflation data is due for release on Friday.
Local Market Developments
Last week, South Africa’s annual inflation came in higher than expected at 3.5% year-on-year (against expectations for a moderation to 3.4% year-on-year), from 3.6% in December. Lower transportation costs (-0.2% vs 1% in December), largely reflecting a decline in fuel prices (-3.7% vs 0.6%), were the main drag on overall price growth. Meanwhile, inflation in the heavyweight categories of housing and utilities (4.8% vs 4.9%) and food and non-alcoholic beverages (4.4% vs 4.4%) remained elevated, continuing to support overall price pressures. Food inflation was underpinned by higher meat prices (13.5% vs 12.6%), amid persistent supply constraints linked to foot-and-mouth disease. The annual core inflation rate, which excludes food, non-alcoholic beverages, fuel and energy, rose to 3.4% in January from 3.3% in December.
Looking ahead, Minister Enoch Godongwana is scheduled to table the 2026 Budget in parliament on Wednesday. The Budget is expected to reaffirm government’s commitment to fiscal consolidation.