The revised call
BofA has moved from expecting just one more hike to penciling in two quarter-point moves, one in September and another in November. "We now expect two additional 25 basis point hikes, in September and November, taking the repo rate to a 7.5% peak," wrote Tatonga Rusike, the bank's sub-Saharan Africa economist. That stance diverges from Morgan Stanley and Goldman Sachs Group Inc., which see only a single 25 bp increase in 2026.
Why it changed
Rusike flagged a tougher inflation backdrop since the bank's prior note: the US-Iran conflict has heated up again and oil is trading above $100 a barrel. Those energy risks, combined with the Federal Reserve lifting borrowing costs, have materially altered the outlook for prices.
Inflation and timing
Alongside the rate call, BofA tweaked its price forecasts. Rusike said, "In our previous note, we argued that inflation had likely peaked at 5%." He now expects "headline inflation to average 5% in the fourth quarter," and anticipates the apex at 5.3% during next year's first quarter. Measures of inflation expectations that inform policymakers weakened, slipping to 3.8% in the third quarter after 3.9% previously, but the bank still sees oil as a risk ahead. BofA also thinks the start of rate cuts will likely slip to the second half of 2027.
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What to watch next
Keep an eye on Wednesday's SARB decision and the tone of Governor Kganyago's remarks for clues on November. If oil stays north of $100 and the Fed remains firm, BofA's higher-for-longer path gets more plausible. For everyday budgets, that points to pricier credit lingering and inflation staying a bit sticky into early next year, even if expectations have cooled modestly.
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