South Africa’s weaker-than-expected headline inflation reading of 3.3% y/y for August reinforces our belief that the Reserve Bank’s monetary easing cycle has longer to run. We expect an interest rate cut tomorrow of 25bp to 6.75% (in contrast to the consensus which is expecting a hold). Further ahead, we think the repo rate will eventually be lowered to 5.75% by the end of next year (consensus: 6.50%).
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