When the Reserve Bank last made a decision on interest rates, two months ago almost to the day, the monetary policy committee (MPC) was already warning that the outlook for inflation was worsening, saying it expected a peak closer to the upper end of its 3% to 6% target range. While the effect of the increase in VAT announced earlier in 2018 had up to that point appeared to be less than expected, a weaker rand and "higher oil price assumptions" had resulted "in a more elevated inflation trajectory". In one way or the other, the risks to the outlook were clearly linked to the performance of the rand, though governor Lesetja Kganyago and his deputies have stressed that the central bank does not target the currency. Nevertheless, they spent a fair bit of time in their statement talking about movements in currency markets, citing the strength of the dollar, which automatically means a weaker rand. They were also worried about the effect of Donald Trump’s trade war with China, which has ...

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