The SARB’s Monetary Policy Review published this week set out plenty of upside risks to inflation, but it looks like some of the risks from VAT hikes and tariffs have diminished. With inflation likely to remain soft, we think the SARB will cut interest rates a bit further than most expect. Elsewhere, the rise in inflation in Nigeria last month on the back of naira weakness will be a blow to the central bank’s ambitions of lowering interest rates. While disinflation is not far away, inflation may prove sticky, and not come down as far as we previously thought.
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