The rand slipped on Friday morning, taking a breather after racing to a fresh two-and-half-year high against the dollar in the wake of the Reserve Bank leaving interest rates unchanged. As widely predicted, the monetary policy committee (MPC) flagged several factors that could have a negative effect on the inflation outlook, which is set to average 4.9% in 2018, better than a previous forecast of 5.2%. Bank governor Lesetja Kganyago mentioned the uncertainty around the budget, which Finance Minister Malusi Gigaba is scheduled to deliver in February, as well as the ratings review Moody’s is set to deliver shortly thereafter. Moody’s is the only major ratings company that still has SA’s debt rating at investment grade, after S&P Global Ratings and Fitch both relegated the country junk status in 2017. The universal junk status is likely to trigger bond outflows, affecting the rand and the inflation outlook. But the extent of the damage in the event of a Moody’s downgrade remains unclea...
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