May was a month of significant global and local economic developments. While uncertainty around US policy continues to influence global markets, tensions eased somewhat with a temporary US-China trade truce that rolled back some of the steep tariffs. A US court ruling challenged presidential authority over trade, while a new budget extending 2017 tax cuts is set to widen the US deficit by up to US$5 trillion. Moody’s responded by downgrading the US credit rating. Despite these concerns, US economic data held up, and the Federal Reserve kept rates unchanged.
Globally, 14 central banks, including the SARB, cut rates in response to weaker growth and easing inflation. In SA, April inflation dropped to 2.8%, prompting a 25bps rate cut. Although SA’s 2025 growth forecast was revised lower, Treasury’s updated Budget reinforced a credible path to fiscal consolidation, with debt projected to peak this year before declining. Markets were volatile but ended stronger. US and Asian indices rallied on the tariff pause and the JSE gained 3%, led by industrials.