Better rainfall leading to a larger harvest is likely to keep the Reserve Bank’s repo rate level at 7% during 2017, BMI Research said in a note on Tuesday morning. "The risks to this view are considerable though, and skewed to the upside. Indeed, should we see a sharper than expected hiking cycle by the US Federal Reserve or a domestic policy misstep causing severe capital flight, this would likely be enough to force the Reserve Bank to continue tightening," BMI said. The research firm expects SA’s gross domestic product growth to accelerate from about 0.5% in 2016 to 1.1% in 2017 which "implies a still quite tepid economic outlook". Inflation is likely to continue to climb above the Reserve Bank’s 6% ceiling for the next few months, but BMI forecasts it will fall back within the band once farmers start harvesting between May and July. "Severe El Niño-related drought saw grains prices soar in the early part of 2016, while in the latter part of the year, the higher input costs began ...

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