South African inflation plunged to 2.1% y/y in May, which probably takes it near the trough. But even as price pressures start to pick up, the headline rate will remain very subdued, allowing the Reserve Bank to continue easing. We think that policymakers will cut the repo rate by a further 75bp, to 3.00%, in the coming months while markets expect only a 25bp cut to 3.50%.
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