Bonds improve sharply as Reserve Bank keeps rates unchanged
The bond market follows the stronger rand, which firmed to a six-month high of R13.3106 against the dollar
The South African bond market was sharply firmer in late afternoon trade on Tuesday, as the Reserve Bank kept rates unchanged, with the market taking the view that the interest-rate cycle was at a peak. The bond market followed the stronger rand, which firmed to a six-month high of R13.3106 against the dollar, even dipping below R13.30 at one point to R13.2906. That was despite the warning that concern of higher inflation would keep the Bank alert. "The monetary policy committee (MPC) remains concerned about the inflation outlook, while inflation is expected to moderate in the months ahead and return to within the Bank’s target in the second half of 2017," said First National Bank chief economist Sizwe Nxedlana. He said the stronger rand should offer some support to the inflation outlook; however, risks stemming from global events could destabilise the rand in the months ahead. "We believe the Bank would opt to keep rates on hold until greater policy clarity from the US emerges," Nx...
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