The South African Reserve Bank surprised markets with an interest rate cut on Thursday. While most economists have been expecting the bank to move towards a cut‚ it was not expected to come quite so soon. The Bank cut the repo rate to 6.75% from 7%. Bank governor Lesetja Kganyago highlighted an improving inflation outlook and deteriorating growth — though there were risks to the inflation outlook‚ he said. “Despite a degree of volatility‚ the rand exchange rate has been relatively resilient in the face of expected monetary policy tightening in some advanced economies‚ as well as domestic political risks and uncertainties. Risks to the inflation outlook still remain. “The rand remains vulnerable to increased global risk aversion‚ domestic political shocks‚ and to the possibility of further ratings downgrades‚” he said. Kganyago outlined the following inflation forecasts: - 2017: consumer inflation will average 5.3% (from the May forecast of 5.7%); - 2018: 4.9% (from 5.1% forecast in ...

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