Macroeconomic Forecast South Africa

BMI View: In line with our expectations, the South African Reserve Bank (SARB) cut the benchmark interest rate by 50 basis points to 6.00% on September 10. The decision brings the cumulative total of cuts to 550bps since December 2008 and takes the benchmark rate to a three-decade low. We expect the repo rate to remain at 6.00% for an extended period, as inflation looks set to remain benign. In our view, the first hike will not take place until the final months of 2011 at the earliest.

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