FX.co ★ South Africa 10-Year Bond Yield Edges Down

South Africa’s 10-year government bond yield has eased to approximately 8.35%, retreating from recently observed one-month peaks near 8.45%. This shift is attributed to growing anticipations of forthcoming rate reductions. In December 2025, the inflation rate experienced a slight increase to 3.6% from 3.5% in November, remaining comfortably within the one percentage point tolerance interval of the newly adjusted 3% target. Economists are forecasting a potential rate reduction by the Monetary Policy Committee (MPC) of 25 basis points on January 29, following an annual inflation average of 3.2% in 2025, which falls below the central bank’s forecast of 3.3%. This subdued price growth is supported by a strengthened rand, historically low inflation expectations, and lowered oil prices. During an interview with Bloomberg TV at the Davos forum, Lesetja Kganyago, South Africa’s central bank governor, mentioned that inflation is projected to meet the South African Reserve Bank's (SARB) revised aim of 3% by 2026, ahead of the initially planned 2027 timeline. Kganyago also suggested the possibility of implementing two rate cuts within the year. In the November meeting, he conveyed that officials felt reassured about having the flexibility to adopt a less restrictive policy stance due to the improved inflation outlook.