The minutes of the Fed’s September policy meeting contained a similar message as recent Fedspeak: upside risks to inflation have diminished and downside risks to employment have increased. However, the minutes also reflected general agreement among policymakers that the initial 50bp move would not commit the Fed to any particular pace of rate reductions in the future. The outsized cut was primarily motivated by risk management considerations, rather than concern over an impending economic collapse or financial market crash (as is usually the reason for such big rate cuts). The focus now shifts to today’s US CPI print for September, although it is unlikely that the data will significantly change ebbing bets on an aggressive Fed easing cycle. Even though more encouraging signs of disinflation are likely, policymakers appear much more concerned with the employment part of their dual mandate at the moment.
On the local front, the data card heats up with mining and manufacturing production stats for August, which will provide fresh insights into the general momentum within SA’s productive sectors. Consensus expectations suggest that the data will show a continuance of industry stagnation, with no clear signs of a resurgence in economic activity despite the end of load-shedding. The hurdles that the mining and industrial sectors face may take time to address, but increased public-private sector partnerships are likely the only feasible way forward. As such, the hope is that the GNU will allow more private-sector involvement in SOEs, as it has alluded to in recent months.