Global & Local Bonds – 4th Quarter December 2020

Local bond market and interest rates
The Reserve Bank’s monetary policy committee kept the interest rate unchanged at 3.5% at their final meeting of 2020 even as it revised down its forecast for growth. While underlying economic conditions are easing, South Africa’s recovery remains challenging. Even though inflation is under control at 3.3%, a clear and strong shift to growth is still lacking, requiring more than historically low interest rates.

A key consideration remains how to balance growth at sustainable debt levels. The local bond market delivered 6.71% over the quarter, well in excess of cash which achieved 0.97%.

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