The South African Reserve Bank’s decision to lower its repo rate by 25bp to 7.75% was not a surprise and Governor Kganyago sounded more optimistic that inflation is under control. Lingering concerns about the vulnerability of the rand and the growing likelihood that the inflation target is lowered mean the SARB will continue to move in cautious 25bp steps, but for now we remain comfortable with our forecast for the repo rate to be lowered to a below-consensus 6.25% by the end of next year.
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