South African government bonds were steady on Wednesday afternoon, after the Reserve Bank’s monetary policy committee cut interest rates by 25 basis points, as widely expected. Bank governor Lesetja Kganyago cautioned, however, that the rand was "overvalued", implying that it was unlikely to appreciate further from current levels. The rand exchange rate has a big effect on the outlook for inflation, to which local bonds are sensitive. Government bonds have strengthened materially since December as a result of an improved political and economic outlook. "Investors view the rate cut as ‘growth positive’ for the South African economy that has experienced disappointing GDP growth in recent years," PPS Investments portfolio manager Luigi Marinus said. "The significant progress made within SA in this quarter bodes well for promising economic growth prospects." The Bank’s monetary policy committee last cut rates at its July 2017 meeting‚ which was the first cut in five years. At 3.45pm, th...
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