{"id":6526,"date":"2026-05-28T04:10:00","date_gmt":"2026-05-28T02:10:00","guid":{"rendered":"https:\/\/dotnewsconnect.co.za\/fin\/?p=6526"},"modified":"2026-05-29T09:52:53","modified_gmt":"2026-05-29T07:52:53","slug":"higher-for-longer-navigating-inflation-interest-rate-uncertainty","status":"publish","type":"post","link":"https:\/\/dotnewsconnect.co.za\/fin\/2026\/higher-for-longer-navigating-inflation-interest-rate-uncertainty\/","title":{"rendered":"Higher-for-Longer: Navigating Inflation, Interest Rate Uncertainty"},"content":{"rendered":"\n
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\u201cGovernment has been exceptionally able in printing money and creating promises, but is unable to print gold or create oil.\u201d (Warren Buffett, 1979 shareholder letter)<\/p>\n<\/blockquote>\n\n\n\n

While we entered the year expecting orderly rate cuts, easing geopolitical pressure, and a growing world economy, we now face the worst-case inflation risk: NACHO \u2013 Not a Chance Hormuz Opens. At the time of writing, May had seen a series of failed diplomatic attempts to secure an end to the war between the US and Iran, with the priority being opening the Strait of Hormuz and thus allowing 20% of the world\u2019s oil to flow freely again.<\/p>\n\n\n\n

Against this backdrop, global markets spent most of the month in a tug-of-war between better-than-expected US corporate earnings on the one hand and concerns about the war\u2019s impact on the macro economy on the other. When the dust settled they had ended the month higher, though some analysts are seeing the equity market\u2019s rally as increasingly fragile and underpinned by shaky fundamentals.<\/p>\n\n\n\n

NACHO and the inflation comeback nobody wanted<\/h6>\n\n\n\n

In May, Brent crude briefly traded above $110 per barrel as the Strait of Hormuz remained closed and US-Iran negotiations stalled. There\u2019s even been talk of NACHO (Not a Chance Hormuz Opens), a worst-case tail risk facing markets.<\/p>\n\n\n\n

This has meant the Federal Reserve, which opened 2026 with two rate cuts priced in by futures markets, is not expected to cut again this year, and Europe is moving in the same direction. The phrase that dominated May\u2019s investor communications across every major global investment house was the same: \u201chigher for longer\u201d.<\/p>\n\n\n\n

South Africa: Caught in the crossfire<\/h6>\n\n\n\n

As a net fuel importer, South Africa\u2019s April CPI surprised sharply to the upside, increasing to 4.0% year-on-year versus 3.1% in March \u2013 the highest reading since August 2024. The jump was driven almost entirely by fuel prices, but second-round effects are already visible in transport costs and food inflation.<\/p>\n\n\n\n

The South African Reserve Bank has held the repo rate at 6.75% for two consecutive meetings, before raising it 25 basis points at the latest MPC meeting. For South African investors, this means the tailwind of a rate-cutting cycle may be reversing.<\/p>\n\n\n\n

Navigating the higher-for-longer reality<\/h6>\n\n\n\n

So, what should South African investors be doing to position themselves for this shift in the global macroeconomic landscape? Here\u2019s a checklist of what to consider when higher inflation and interest rates are on the horizon:<\/p>\n\n\n\n