In the loop 18 September 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R17.44/$, after closing weaker yesterday (R17.36/$*).
EM currencies were mixed yesterday; the MYR (+0.4%), INR (+0.3%) and CNY (+0.1%) were the biggest gainers; the RUB (-0.5%), CLP (-0.5%) and ARS (-0.3%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

Central bank watch: the US FOMC has cut the Fed funds rate by 25 bps, as expected.
The committee voted 11-1, with one policymaker dissenting in favour of a larger reduction.
The FOMC cited growing signs of weakness in the labour market as justification for the move.
Further, the Committee signalled that two additional cuts are likely this year.
It also noted that the “balance of risks” has shifted, with a stronger emphasis now placed on supporting employment, rather than curbing inflation.
At the same time, the FOMC acknowledged that inflation has “moved up and remains somewhat elevated”.

The Brazilian central bank has held its benchmark interest rate unchanged, at 15%.
The bank signalled that there’s no change in sight to the current level of borrowing costs while policymakers guard against inflation risks.

The BOE’s interest rate decision is expected today; the central bank is expected to hold rates steady.
The central bank signalled growing concern over inflation at its last policy meeting.

ECB Governing Council member Luis de Guindos said yesterday that the central bank stands ready to adjust policy if economic conditions change.
He noted that inflation is now close to bank’s target, and the economy remains resilient.
This could lead the ECB to keep rates on hold for a second consecutive meeting.
Policymakers have repeatedly stressed the importance of flexibility.
Several have warned against further action, while others have left the door open to potential adjustments.
Governing Council member Yannis Stournaras added that the ECB must stay nimble, even after achieving what he described as a “soft landing” for the European economy.

The US leading index for August is scheduled for release today; the index is likely to have fallen by 0.2% m/m, after having declined by 0.1% m/m in July.

Locally, the SARB is set to announce its interest rate decision today after the conclusion of its two-day MPC meeting.
While the decision was seen as a close call before the release of yesterday’s inflation data, the CPI undershoot may tilt the balance in favour of a 25bps repo rate cut, a scenario to which we assign a near-even probability.
We’ll be watching closely for any revisions to the SARB’s inflation and growth outlooks, which could provide further insight into the policy path ahead.

Brent crude oil is currently at $67.72/bbl; ($67.95/bbl*).
Gold is at $3656/oz ($3659/oz*).
SA CDS 149bps*, Brazil 126bps* and Turkey 241bps*.
Yields: US 10yr at 4.08%*, German bund at 2.67%*, SA 10-year generic at 9.26%*, SA’s R2035 at 9.15%*.

* Denotes yesterday’s close.

Key events and data:

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