The SARB announced that it would keep interest rates on hold at 6.5% at its September MPC meeting, and its latest quarterly projection model pointed to no interest rate changes through year-end. The growth outlook for 2020 and 2021, however, was revised down from 1.8% to 1.5%, and from 2.0% to 1.8% respectively. Preliminary results showed that GDP expanded 3.1% in the second quarter, well above market consensus of 2.5%. With inflation under control at 4.3% y/y in August, the SARB also lowered its inflation forecast for 2019 to 4.2%, from 4.4% previously. Ratings agency Moody’s announced that it would keep SA’s growth forecast for 2019 at 0.7%, after revising it down from 1.1% in June. Moody’s is currently the only credit-ratings agency that has not downgraded SA to sub-investment grade.

In a string of poor economic data, retail sales dropped from 2.4% y/y in June to 2.0% y/y in July; the Absa Purchasing Managers’ Index declined to 45.7 in August from 52.1 in July (well below the 51.4 market consensus); and manufacturing production contracted 1.1% y/y in July from +3.6% y/y in June. The government’s gross loan debt increased to 58.3% of annual GDP for Q2 2019, surpassing the February 2019 budget’s projection of 56.2% for the full 2019/2020 fiscal year.

In September, the BEASSA All Bond Index posted 0.5%, inflation-linked bonds (the Composite ILB Index) delivered 0.4%, and cash as measured by the STeFI Composite Index returned 0.6%.

The fund has returned 8.5% over the past 12 months, compared to the Prudential Money Market Fund's 7.5% return and the Prudential High Interest Fund's 7.7% return over the same period.

At the second Monetary Policy Committee (MPC) meeting of the year, the South African Reserve Bank (SARB) announced that it would keep interest rates unchanged at 6.75%, in line with market expectations. GDP for 2018 came in at 0.8% (y/y), slightly higher than expected; however the SARB indicated that this may be revised down to 0.7% (y/y). The SARB also lowered its growth forecast for 2019 from 1.7% to 1.3% and from 2.0% to 1.8% for 2020. Inflation for February was relatively subdued at 4.1% (y/y), marginally firmer than the 4.0% (y/y) posted in January. Meanwhile, ratings agency Standard & Poor's revised its outlook for Eskom from negative to stable.

The BEASSA All Bond Index returned 1.3%, inflation-linked bonds (the Composite ILB Index) delivered -0.8%, and cash as measured by the STeFI Composite Index returned 0.6%.

The fund has returned 8.8% over the past 12 months, compared to the Prudential Money Market Fund's 7.4% return and the Prudential High Interest Fund's 7.6% return over the same period.