In the end, the South African Reserve Bank decided to focus on the long-term risks to inflation, raising interest rates for the first time since 2016. “The decision was arrived at after a robust debate,” deputy governor Daniel Mminele said. “The arguments for, and against, were equally strong.” Currency markets cheered the decision, which improves the yield advantage of holding local assets versus their developed-country counterparts, pushing the rand up by as much as 1.3% in the immediate aftermath of the Bank's decision. It was 1.24% stronger at R13.7552 by 6pm, cutting its decline in 2018 to 9.9%. Government bonds firmed, with the yield on the R186 maturing in 2026 falling to 8.95%, from Wednesday's 9.04%, its best level since late August. The decision came despite policymakers revising their medium-term forecasts lower, predicting that headline inflation will now peak at about 5.6%, closer to the midpoint of the 3% to 6% target range, in the third quarter of 2019. After their Se...

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