Bonds trade slightly weaker as possible interest-rate cut remains a while off
The bond market was slightly weaker on Friday at midday on indications the Reserve Bank would not be overhasty in reducing interest rates, despite recent positive data and a stronger rand. The improvement in the current-account deficit to 1.7% of GDP in the fourth quarter from 3.8%, as well as a declining trend in inflation, has set the scene for falling inflation. But most analysts say the Bank would remain cautious and wait until the second half of the year before considering a cut. The Bank’s monetary policy committee (MPC) is set to meet next week, and no change is expected. "The hawkish stance of the MPC had dulled somewhat over the course of last year and this year, but had not turned dovish," said Investec chief economist Annabel Bishop. She said the rand’s persistent strength this year was unlikely to have changed the MPC’s forecasts of consumer inflation materially as there was limited feedthrough when the currency appreciates, versus the more substantial effect of rand dep...
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