Johannesburg — The South African rand softened on Wednesday as local inflation fell to a three-year low in July, solidifying analysts’ expectations of an interest rate cut by the South African Reserve Bank next month.
At 1511 GMT, the rand traded at 17.8450 against the dollar, 0.25% softer than Tuesday’s close.
Consumer inflation fell more than expected to 4.6% in July from 4.8% a year ago and 5.1% in June statistics agency data showed. Analysts polled by Reuters had forecast annual inflation of 4.9%.
The latest figure was within touching distance of the central bank’s preferred level of inflation of around 4.5%, the midpoint of its 3% to 6% target range. Economists polled by Reuters expect a rate cut of 25 basis points (bps) on Sept. 19.
“The favourable inflation print should give the (central bank) greater confidence to commence its easing cycle with a 25-bps cut in September, and back it up with another 25-bps cut in November,” said Jee-A van der Linde, senior economist at Oxford Economics.
Global markets are awaiting minutes of the Federal Reserve’s latest meeting, due later on Wednesday, for clarity on the rate-cut path of the U.S. economy.
In the stock market, the Top-40 index closed 0.33% higher.
South Africa’s benchmark 2030 government bond rose, reducing the yield 16.5 basis points to 9.120%.
Five Kenyan police officers were arraigned on Wednesday, court documents showed,
*Tannur Anders & Bhargav Acharya; editing: Rashmi Aich & Richard Chang – Reuters
