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Political risks to the rand dominated the narrative on Thursday as the Reserve Bank’s monetary policy committee opted to keep interest rates unchanged — as expected — despite a better inflation outlook. After a week in which the rand dropped 5% at one stage on news that President Jacob Zuma had recalled Finance Minister Pravin Gordhan from an international investor road show, the committee made it clear that "the risk of further rand weakening overshadows the inflation outlook" and warned that the rand was likely to show further reaction to unfolding political developments "until a greater degree of certainty and confidence is restored". The Bank’s inflation forecast has improved since the committee’s last meeting in January, largely because of the way the rand has strengthened. And while food prices are coming down slower than expected, fuel prices are showing a more favourable trend. The Bank now expects inflation to come down to within the target range in the second quarter of 20...

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