South Africa’s central bank governor warned that policymakers are spotting early signs of second‑round inflation effects as underlying price pressures build. The comment came amid a series of monetary‑policy meetings that have kept the repo rate unchanged despite volatile commodity markets. Investors see the warning as a signal that the bank may tighten sooner rather than later in the coming weeks for the market.

Analysts note that second‑round inflation typically follows wage hikes and rent increases, feeding back into consumer prices. With South Africa’s growth already under pressure from power shortages and a weak rand, any upward shift in inflation expectations could raise borrowing costs for firms and strain household budgets. Bond yields have edged higher as traders price in a tighter stance and could spur a rating review.

The governor’s alert adds weight to the Reserve Bank’s credibility in anchoring inflation expectations, a core mandate of its policy framework. Market participants will watch upcoming CPI releases for evidence that price pressures are indeed spilling over. A confirmed rise could prompt a rate hike at the next policy meeting, tightening financing conditions for businesses and may affect equity valuations.