July rate cut on the cards as Reserve Bank turns dovish
The rand breaks through the R14.50/$ level for the first time in more than two weeks
The Reserve Bank has prepared investors for a cut in interest rates that some economists say may come in less than two months. The Bank, which kept interest rates unchanged on Thursday, downgraded its 2019 economic growth forecast and said inflation would stay close to the mid point of its target range. Governor Lesetja Kganyago also disclosed that two members of the five-person monetary policy committee (MPC) voted to cut the repo rate immediately, making this the closest call since their meeting in November 2018, which ended with a 25-basis point increase to 6.75%. The MPC next meets on July 16-18. The rand declined and bonds advanced on Thursday, with the currency breaking through the R14.50/$ level for the first time in over two weeks. It was 0.7% weaker at R14.473/$ after the JSE closed. SA’s currency fell 0.72% to R18.341/£ and depreciated 0.72% to R16.1459/€. Lower rates reduce the attractiveness of holding the rand versus assets denominated in foreign currencies. For Preside...