South African rates seen on hold all year amid inflation worry

South Africa’s central bank won’t cut interest rates this year because of persistent inflation and there’s even a risk it could raise them, bets in financial futures markets show. The shift, which followed a hotter-than-expected reading on US consumer prices for March, now indicates investors pricing in a slight prospect the South African Reserve Bank will increase rates at its meeting next month. The repricing on Thursday was in response to a sharp change in sentiment on how quickly and by how much the Federal Reserve will start cutting rates, after US consumer inflation failed to slow as expected. That’s prompted traders to erase bets on monetary policy easing in South Africa. Forward-rate agreements used to speculate on borrowing costs show traders are now pricing in an about 20% chance of a quarter-point interest rate hike at the central bank’s May 30 meeting. That compares with no change expectations at the start of the month.