Consumer price inflation slowed to 4.9% year-on-year in August, from 5.1% in July. Despite inflation moderating in August, we expect consumer prices to increase in the months ahead due to the inflationary effects of the higher oil price, combined with a weaker domestic currency.

At its fifth Monetary Policy Committee (MPC) meeting of 2018, the South African Reserve Bank decided to keep the repo policy interest rate unchanged at 6.5%. This was despite revising upward their forecast for inflation in 2019 and citing upward risks to their inflation outlook. The committee noted that developments in the international environment had placed upward pressure on the inflation trajectory, while the domestic growth outlook remains challenging. The Rand (along with other emerging currencies) remain vulnerable to a faster than expected pace of monetary policy normalization by the US Fed that could trigger a reversal in capital flows to emerging markets. We therefore, remain of the view that the interest rate cycle has bottomed and are likely to see interest rate increases in the months ahead. The term to maturity of the fund remains approximately 90 days.

The fund is only invested in the five major banking institutions, ensuring the lowest possible risk for our investors.