US Fed cuts rates by 50 basis points. Now, it's South Africa's turn...

Lester Kiewit speaks to Mia Kriegler, Director of Asset Management at Kruger International Asset and Wealth Management.

Listen below.

Consumer price inflation (CPI) slowed for a third consecutive month in August 2024, dipping to 4,4% from 4,6% in July.

RELATED: Positive sign for rate cut outlook as inflation falls below 5%

That is the lowest inflation rate since April 2021 when the rate was also 4,4%.

Fuel prices continued to trend downward, declining for a third consecutive month.

Lower annual inflation rates were also recorded in several sectors, led by transport, housing, and restaurants and hotels.

However, the annual inflation rate for food and non-alcoholic beverages picked up to 4.7% in August (from 4.5% in July) after an eight-month downward trend.

Most product groups registered higher annual rates.

RELATED: Further inflation slowdown boosts hopes for rate cut on eve of MPC meeting

The South African Reserve Bank is expected to lower interest rates by 25 basis points, reducing the benchmark repo rate to 8%. The final call will be made on Thursday afternoon (19 September 2024).

Kriegler expects South Africa will see a substantial interest rate cut based on the Federal Reserve Bank in the United States dropping their interest rates by 50 basis points on Wednesday evening (18 September), for the first time in over four years. 

"We have expected the cut but the extent of the cut; that's been debated.."

- Mia Kriegler, Kruger International Asset and Wealth Management

"A very important occurrence happened last night in the US where the Federal Reserve Bank cut their interest rate by a substantial 50 basis points. This was the first interest rate cut in more than four years from the US and it will be the same story in South Africa if the cut happens this afternoon, which we believe it will."

- Mia Kriegler, Kruger International Asset and Wealth Management

"The rand has strengthened quite a bit since the NPC chose to wait for the Federal Reserve Bank in the US to cut their interest rate before cutting ours... so the South African position is pretty strong at this stage, especially since inflation also came in lower than expected, which is a very big relief for consumers in South Africa."

- Mia Kriegler, Kruger International Asset and Wealth Management

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