March 16, 2021/Coronation Research

Inflation continues to rise, with February inflation reported at 17.33% year-on-year after 16.47% y/y in January, and food inflation at 21.79% y/y. Policy makers believe that structural issues are the core problem, but we sense that they include market interest rates in the mix when it comes to considering all the drivers of inflation.

This could mean that the current upward trend in market interest rates will be tolerated – to an extent. We are looking for 10.00% per annum 1-year T-bill rates by mid-year.

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