South Africa: No SARB hikes, market says "yikes": We see a September hike; move MW ZAR and SAGBs and close 5y5y ZAR IRS receivers vs. USD

Research evidence excerpt

South Africa: No SARB hikes, market says "yikes": We see a September hike; move MW ZAR and SAGBs and close 5y5y ZAR IRS receivers vs. USD

J P M O R G A N Africa Economic Research

23 July 2026

South Africa: No SARB hikes,

market says “yikes”

We see a September hike; move MW ZAR and SAGBs

and close 5y5y ZAR IRS receivers vs. USD

EM, Economic and Policy Research

Sonja Keller

(27-11) 507-0376

sonja.c.keller@jpmorgan.com

JPMorgan Chase Bank, N.A., Johannesburg

Branch

• Split SARB shocked markets by holding the repo rate steady at 7% against Emerging Markets Strategy

expectations of a 25bp hike that was more than fully priced. AC Anezka Christovova

• Inflation expectations and the recent rise in services inflation received (44-20) 7742-2630

limited airtime beyond a comment that the latter was “problematic”. anezka.christovova@jpmorgan.com

J.P. Morgan Securities plc

AC• We now think a September rate hike will be difficult to avoid, unless prices Michael Harrison

of petroleum products cooled swiftly and services inflation steadied. (44-20) 7134 5720

• Rates Strategy: Move MW SAGBs (from OW) in the GBI-EM Model michael.p.harrison@jpmorgan.com

Portfolio and close 5y5y ZAR IRS receivers vs. USD (entry: 423bp, exit: J.P. Morgan Securities plc

503bp, total return: -80bp).

• Our bullish rates view has been predicated on a positive story playing out amid

lower oil prices, a better risk-environment and SARB hikes anchoring the long-

end. Clearly these assumptions have been quickly challenged, and the SARB

pause today versus market pricing of 30bp of hikes is likely to exacerbate near-

term pain. We therefore turn neutral.

• FX Strategy: We move MW ZAR from OW. We held the OW since June 8,

with ZAR now delivering 0% total return over this period including today’s

sell-off.