Reserve Bank rate cut rests on inflation below 6% over the next few years
Outlook risks ‘could deteriorate amid uncertainty’
The Reserve Bank will consider cutting interest rates only when it sees evidence the decline in the inflation rate to below 6% can be sustained over the next few years. The Bank’s monetary policy committee kept rates on hold, as expected, despite an improvement in the short-term inflation outlook, saying on Thursday in the highly uncertain environment "the risks to the outlook could easily deteriorate". Though the rand is slightly stronger against the dollar than it was at the time of the committee’s previous meeting, in March, the committee warned the rand was vulnerable to further ratings downgrades, especially of SA’s local currency ratings. It was also vulnerable to changes in global risk sentiment to emerging markets. As consumer and producer price inflation were below market expectations over the past two months and the rand strengthened, the market had started to price in possible interest rate cuts later in 2017. Reserve Bank governor Lesetja Kganyago said those who expected...
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