South Africa: Surprise 25bps rate cut from SARB – TDS

Analysts at TD Securities point out that the SARB has surprised the prevailing market expectations with a 25bps rate cut.

Key Quotes

“We and the consensus had expected a hold, though we attached only a low 60% chance to such outcome. The MPC voted unanimously, after lowering again CPI and growth projections, acknowledging a modest improvement in certain external risk factors, and a realignment of the ZAR to fair value.”

“We also believe the SARB is less worried about the potential implications of a Moody's downgrade to junk.”