In late March, the Reserve Bank projected that it could cut its policy rate by 25 basis points and still meet its new inflation target. This projection assumed that the policy stance is currently restrictive relative to market conditions, that inflation expectations are anchoring to the new target, and that the spike in the global oil price would be short-lived. As we argued in a recent Business Day article, there is growing evidence that these assumptions are not going to hold in 2026. As we showed in earlier posts, the market agrees.
