Consumer price inflation measured 4.3% for the year ending August, up from the 4.0% increase recorded in July. Both headline and core inflation have remained at or below the midpoint of the SARB’s inflation target since December 2018. Subdued global inflation and weak domestic demand have contributed to the muted inflation outcomes in 2019.

At its fifth meeting of 2019, the Monetary Policy Committee (MPC) of the South African Reserve Bank unanimously decided to keep the repo policy interest rate unchanged at 6.5%. This was despite indications of continued accommodative monetary policies in advanced economies and a balanced assessment to the inflation outlook risk. The MPC reinforced its stance that monetary policy will continue to be focused on anchoring inflation expectations near the mid-point of the inflation target range in the interest of balanced and sustainable growth, with policy decisions remaining highly data dependent. Looking ahead, the risk of a ratings downgrade by Moody’s remains high as fiscal metrics continue to deteriorate whilst GDP growth remains subdued. Given this and the risk of a weaker currency to the inflation outlook, we anticipate the MPC to retain a cautious policy stance and for the interest rate cutting cycle to be shallow.

The fund is only invested in the five major banking institutions and shorter dated SA government treasury bills, ensuring the lowest possible risk for our investors.