Monthly Market Highlights – July 2024

As anticipated, the Monetary Policy Committee of the South African Reserve Bank maintained the repo rate at a 15-year high of 8.25% for the seventh consecutive meeting. Similarly, the European Central Bank left interest rates unchanged at 3.75%, following a landmark rate cut in June. In a surprising move, China lowered both its major short- and long-term interest rates for the first time since August 2023. The one-year loan prime (LPR) rate was lowered to 3.35% from 3.45%, and the five-year LPR, the benchmark for mortgage loans, was reduced to 3.85% from 3.95%.

South Africa’s inflation rate fell slightly in June, reaching a six-month low. The Consumer Price Index (CPI) increased 5.1% year-on-year (y/y) in June, relative to 5.2% in the previous month. In the US, inflation also dropped slightly, with the CPI declining 0.1% from May, slowing the annual rate of inflation to 3% from 3.3% in May. In the UK, inflation held steady at the Bank of England’s 2% target. Meanwhile, Japan’s core inflation accelerated for a second straight month in June. Core CPI, which excludes volatile fresh food prices, rose 2.6% y/y in June, slightly below market forecasts of 2.7%.

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