South Africa's 10-year government bond yield approached 9.30%, its highest since mid-January, amid reduced expectations for interest rate cuts and a more optimistic economic outlook. In an interview at the World Economic Forum's annual meeting in Davos, Reserve Bank Governor Lesetja Kganyago warned that U.S. protectionist policies could raise inflation and hinder future rate reductions, though South Africa remains relatively insulated from direct U.S. trade tariffs. However, potential duties on Chinese imports could impact emerging markets like South Africa. The central bank cut interest rates at its last two meetings of 2024, and it is anticipated to deliver another reduction later this month. Meanwhile, Kganyago indicated a more optimistic economic outlook for South Africa in 2025, with growth potentially reaching 2%, up from 1.1% in 2024, driven by ongoing structural reforms and the coalition government’s momentum.
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