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No SARB rate cuts in 2024, SSA subsidy removal

The SARB’s biannual Monetary Policy Review published this week, which showed less confidence in South Africa’s disinflation trend and reiterated the desire to move to a lower inflation target, suggests that policymakers are not likely to cut interest rates at all this year. We now forecast the first cut to come in 2025. Meanwhile, Angola became the latest SSA economy to cut its fuel subsidies which is a positive given the fiscal strains that these subsidies bring. But the experience from elsewhere suggests that it will be politically challenging to avoid at least a partial reversal.

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