In the loop 06 March 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.29/$, after closing stronger yesterday (R18.34/$*).
EM currencies were largely up yesterday; the PLN (+2.9%), CZK (+2.7%) and HUF (+2.7%) were the biggest gainers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

Central bank watch: the ECB will meet today and is largely expected to cut its benchmark interest rate by 25 bps.
The Central Bank of the Republic of Turkey is expected to cut rates by 250 bps in a third cut.

BOE Governor Andrew Bailey yesterday commented that the current inflation increase is unlikely to have second-round effects because of the weak economic backdrop.
Bailey noted that the price increase for food, water, bus fares and private school fees are not “telling you much about the state of the economy”.
He added that the central bank would keep a close eye on the impact of food and energy prices increases on inflation perceptions.
BOE Chief Economist Huw Pill noted that the central bank would need to maintain some level of restrictiveness.
He added that the BOE still has some work to do to squeeze out underlying inflation.
Pill noted that he is against larger and more rapid interest rate cuts.
He stressed that the central bank would need to remain vigilant to new shocks and disturbances in the market.
BOE policymaker Megan Greene highlighted that, should the US impose tariffs on the UK, it could adversely affect the UK economy.
Greene noted that the impact on inflation is unclear at this stage.
Greene also noted that it would be appropriate for the BOE to maintain a cautious approach to removing monetary policy restrictiveness.

The UK’s Decision Maker Panel 3m and 1yr inflation expectations for February are due out today.
One-year ahead inflation expectations are expected to have increased to 3.1% in February, from 3.0% in January.
The 3m ahead inflation expectations are also expected to have increased in February, to 4.0%, from 3.9% in January.

The Fed’s Beige Book showed that economic activity improved slightly since January.
Prices, however, increased in most areas, with many regions reporting faster increases than in the previous period.
Businesses have also reported increased uncertainty around new policies under the Trump administration.

The US ISM services index increased in February, to 53.5, from 52.8 in January.
The increase was driven by an increase in new orders and an improvement in employment.

Locally, the current account for Q4:24 is scheduled for release today; the deficit is expected to have narrowed to 0.9% of GDP in Q4:24, from a deficit of 1.0% of GDP in Q3:24.
Electricity production and consumption for January are also scheduled for release today.

Brent crude oil is currently at $69.70/bbl; ($69.30/bbl*).
Gold is at $2916/oz ($2916/oz*).
SA CDS 198bps*, Brazil 178bps* and Turkey 255bps*.
Yields: US 10yr at 4.28%*, German bund at 2.79%*, SA 10-year generic at 10.43%*, SA’s R2035 at 10.43%*.

* Denotes yesterday’s close.

Key events and data:

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