The South African bond market was off to a bright start on Wednesday morning, benefiting from a much stronger rand and better than expected headline consumer inflation data. The yield on the benchmark R186 bond dropped its lowest level since late March, before President Jacob Zuma’s controversial Cabinet reshuffle. The inflation rate, which the Reserve Bank closely monitors when deciding on interest rates, slipped back within the 3%-6% target range for the first time since August. Inflation moderated to an annual rate of 5.3% in April, from 6.1%, according to Statistics SA data. The Bank’s monetary policy committee is likely to take the data into account before making its interest rate decision on Thursday. The relatively benign inflation renders returns in the bond market relatively appealing. "The continued fall of South African inflation … supports our view that the Reserve Bank will cut its key policy rate later this year," Capital Economics’ Africa economist John Ashbourne said...
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