Inflation increased to 5.0% year on year from 4.9% the previous month. Inflation is expected to remain within the target range of 3% to 6% for an extended period. Risks to inflation remain evenly balanced.

The money market yield curve flattened during the month. The three-month rate decreased from 5.075% to 5.063% and the 12- month rate decreased from 5.441% to 5.403%. Treasury bills in the 91 day area traded below the bank rates, and credit spreads on short-term corporate credit narrowed during the month.

The current forward rates suggest that the repo rate will remain unchanged for an extended period.

Inflation came out at 5.7% during the month versus 6.1% the previous month. This outcome was better than expected. Risks to inflation remain evenly balanced.

At the end of May 2012 the ZAR closing level was at R 8.5006 and went as high as R 8.5721 during the month. The closing level for the ZAR at the end of June 2012 was at R 8.1393. The appreciation of the currency and also expectations of an interest rate cut by market participants contributed to the flattening of the money market curve.

Money market rates in the 3 months increased slightly from 5.60% to 5.605% and the 12-month rate decreased from 6.123% to 5.95%. Treasury bills in the 91-day area of the curve traded above the bank rates, and credit spreads on short-term corporate credit narrowed during the month.

The SA Reserve bank kept its benchmark interest rate (Repo) unchanged at 5.50% for a record 18 months on May 24. Current forward rates suggest that the repo rate will remain unchanged for an extended period.

Inflation came out higher than expected at 6.1% versus 6.3% the previous month. This is lower but still above the upper band of the current inflation target range of 3% - 6%. Risks to inflation remain evenly balanced and inflation is expected to remain above the upper band of the target range until the second half of the year.

Three-month money market rates remained unchanged at 5.60% and the 12-month rate decreased from 6.30% to 6.285%. Treasury bills in the 91 day area of the curve traded above the bank rates, and credit spreads on short- term corporate credit narrowed during the month.

The current forward rates suggest that the repo rate will remain unchanged for an extended period.

Inflation came out higher than expected at 6.1% versus the previous month of 6.0%. This is above the upper band of the current inflation target range of 3-6 percent. Risks to inflation remain evenly balanced and inflation is expected to remain above the upper band of the target range for an extended period.

Looking at the graph below the money market yield curve flattened during the month, with the short end of the yield curve that went up and the long end of the yield curve that went lower.

Money market rates in the 3 months increased from 5.575% to 5.595% and the 12 months rate decreased from 6.12% to 6.115%. Treasury bills in the 91 days traded below the bank rates, and credit spreads on short-term corporate credit narrowed during the month.

The current forward rates suggest that the repo rate will remain unchanged.

Inflation remained unchanged at 5.3% during the month. This is still well within the current inflation target range of 3-6 percent. Risks to inflation remain evenly balanced and inflation is expected to remain within the target range for an extended period.

Looking at the graph below the money market yield curve flattened during the month.

Money market rates in the 3 months remained unchanged at 5.575% and the 12 months rate decreased from 5.876% to 5.865%. Treasury bills in the 91 days traded below the bank rates, and credit spreads on short-term corporate credit narrowed during the month.

The current forward rates suggest that the repo rate could decrease further.