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- Falling yields everywhere - Monetary Policy Committee holds as inflation rises
The previous meeting of the South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC) in late March resulted in the repo rate being left unchanged at 5.5%. It was not a unanimous decision, since three of the seven committee members voted for a hike. Consider some of the developments on the inflation front since that meeting:
The rate hike and currency weakness in January saw both the markets and economists calling for an aggressive series of rate hikes. At this time, the forward interest rate market was pricing in six rates hikes over the next 2 years.
Over the past two years South Africa’s sovereign rating has been downgraded by three international ratings agencies, Fitch and Standard and Poor’s (S&P) to BBB and Moody’s to Baa1. Though Fitch put the rating on a stable outlook, both Moody’s and S&P have placed their ratings on a negative outlook.
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