By Bhargav Acharya and Sfundo Parakozov
South Africa’s inflation rate was steady at 3.2% year on year in Februarythe statistics agency said on Wednesday, a day before the central bank is expected to pause its rate-cutting cycle.
Economists had forecast annual inflation would pick up slightly to 3.3%, still well below 4.5% – the level the South African Reserve Bank aims for at the middle of its target range.
Analysts polled by Reuters think a rate pause is likely given risks emanating from U.S. President Donald Trump’s tariff war and a deadlock in the ruling coalition over the national budget.
But Wednesday’s lower-than-expected reading means some see the central bank delivering another cut.
“While the decision will be close, we expect policymakers to proceed with another 25-bp (basis point) cut to the repo rate,” David Omojomolo, Africa economist at Capital Economics, said.
Shaun Murison, senior market analyst at IG, said he thought the central bank would be reluctant to cut rates again on Thursday given the Federal Reserve is expected to keep rates unchanged on Wednesday.
“Doing so could introduce additional inflation risks and erode the interest rate differential that helps attract foreign capital,” he said.
In a Reuters poll published on March 14, 16 out of 22 economists thought the central bank would keep its repo rate at 7.50%, while six predicted a 25-bp reduction.
Reuters
