The rise in South Africa’s headline inflation to 3.6% y/y in December, with core inflation picking up too, suggests that the Reserve Bank will pause its easing cycle later this month. Further out, though, with inflation likely to stay close to the new, lower 3% target, we still think the repo rate will be lowered by 100bp this year, taking it to 5.75%. That is a lower profile than what is implied by market pricing.
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