JOHANNESBURG (Reuters) -The rand was steady on Thursday after the South African Reserve Bank (SARB) cut its main lending rate at the first meeting since its inflation target was lowered.
At 1621 GMT the rand traded at 17.1750 against the dollar, a whisker away from Wednesday’s close.
In a unanimous decision, the SARB trimmed the rate by 25 basis points to 6.75%, while economists polled by Reuters had been divided on what the policy decision would be.
Nedbank economists who predicted the cut said in a research note that the bank’s quarterly projection model points to interest rate cuts of 50-75 basis points over the next two years.
“Our inflation forecast still reflects a slightly more prolonged rise in inflation than that of the SARB. However, much of the anticipated increase stems from the lower statistical base established throughout this year,” said the note.
Headline inflation in Africa’s most industrialised economy quickened to 3.6% year-on-year in October from 3.4% in September, staying within the 1 percentage point tolerance band of the central bank’s new 3% target announced last week.
The bank previously had a target range of 3-6%.
On the Johannesburg Stock Exchange, the Top-40 index was last up 0.3%.
South Africa’s benchmark 2035 government bond was slightly weaker, with the yield rising to 8.6%.
(Reporting by Anathi Madubela and Sfundo Parakozov;Editing by Alexandra Hudson, William Maclean)
