South Africa’s central bank won’t cut interest rates this year because of persistent inflation and there’s even a risk it could raise them, bets in financial futures markets show.

The shift, which followed a hotter-than-expected reading on US consumer prices for March, now indicates investors pricing in a slight prospect the South African Reserve Bank will increase rates at its meeting next month.

The repricing on Thursday was in response to a sharp change in sentiment on how quickly and by how much the Federal Reserve will start cutting rates, after US consumer inflation failed to slow as expected.

That’s prompted traders to erase bets on monetary policy easing in South Africa. Forward-rate agreements used to speculate on borrowing costs show traders are now pricing in an about 20% chance of a quarter-point interest rate hike at the central bank’s May 30 meeting.

That compares with no change expectations at the start of the month.

Economists view the SARB as being wary of moving before the Fed from fear it weakens the rand, which would tend to push up import prices and pressure inflation. Central bank Governor Lesetja Kganyago, though, says policymakers watch the Fed but don’t just follow it.

Inflation expectations have surged over the past two days, adding to the expectations of higher-for-longer in South Africa.

The nation’s breakeven rate — the difference between the nominal yield on five-year sovereign bonds and the inflation-linked yield — climbed 9 basis points Thursday to 5.93 percentage points. The reserve bank’s target inflation is between 3% and 6%.

Yvonne Mhango, Bloomberg’s Africa economist, said the SARB will maintain its restrictive policy stance well into 2025.

“Reducing the inflation rate — currently at 5.6% — to the mid-point of the SARB’s 3%-6% target is taking longer than anticipated,” she said in a research note. “We don’t expect this target, where the SARB would like to see prices anchored, being reached until the second half of 2025, keeping the central bank on hold until then.”