South African rate traders shifted expectations toward monetary tightening as rising oil prices from Middle East conflicts revived inflation concerns. Forward-rate agreements now price in a 24% chance of a 25-basis-point hike at the March 26 policy meeting, a dramatic reversal from pricing almost a 30% chance of a cut just days ago amid global market uncertainty.

The market's outlook for easing has diminished substantially. Traders now anticipate just 15 basis points of rate cuts by year-end, compared with 39 basis points last Friday. Brent crude rising above $80 per barrel threatens to push inflation further away from the central bank's 3% target, while the weakening rand could exacerbate price pressures for consumers and businesses.

Annabel Bishop, chief economist at Investec Bank Ltd., noted policymakers would likely overlook temporary shocks but might raise rates for persistently higher inflation, though she termed that a "severe down case." The rand weakened 1.2% to 16.2937 per dollar on Tuesday, extending its two-day decline to 2.2% as investors reassessed the inflation outlook.