The rand was slightly firmer on Thursday after the SA Reserve Bank’s monetary policy committee (MPC) cut its benchmark interest rate by 25 basis points (bps), in line with market expectations.
Though the decision to reduce the repo rate to 7.75% was unanimous, governor Lesetja Kganyago’s statement was less optimistic than expected, reflecting the Bank’s concern about the economic outlook.
Analysts noted that the Bank’s cautious approach is driven by global developments, including persistent geopolitical tensions and potential inflationary risks.
The rate cut comes after Stats SA reported that annual headline inflation as measured by the consumer price index (CPI) eased to 2.8% in October from 3.8% in September.
Core inflation, which excludes volatile fuel and food prices, also eased, slowing to 3.9% year on year in October from 4.1% in September.
The Bank also revised its long-term inflation forecasts upward, citing higher electricity tariff assumptions, and emphasised significant uncertainty in the medium-term inflation outlook with notable upside risks.
“Notably, a 50bps rate cut, discussed in the previous meeting, was not considered this time around. The monetary policy committee adopted a highly cautious stance, aligning with global central banks, amid geopolitical tensions and risks to the longer-term local inflation trajectory,” said TreasuryONE director Wichard Cilliers.
“Despite this cautious tone, the MPC’s statement hinted at a gradual easing of policy restrictiveness,” Cilliers added.
At 6.40pm the rand was trading 0.11% firmer at R18.09321/$, and had strengthened 0.57% to R19.003/€ and 0.69% to R22.8275/£. The euro was 0.63% weaker at $1.0478.
Globally, investors were assessing Nvidia’s quarterly earnings, which surpassed expectations. Still, the company forecast the slowest revenue growth in seven quarters due to supply chain constraints. These issues will limit deliveries of the flagship Blackwell chips, potentially delaying revenue until 2026.
Alphabet shares dipped after the US justice department suggested Google may be forced to sell its Chrome browser, intensifying the antitrust case against the tech giant, the Wall Street Journal reported.
In other news, the latest economic data in the US shows weekly jobless claims dropped to 213,000 — a seven-month low — indicating a resilient labour market.
“This labour market slack leaves room for a potential third Fed interest rate cut next month,” said Cilliers.
The JSE all share gained 0.29% to 85,522.57 points, with major indices mixed, though the top 40 added 0.22%.
At 7.20pm, the Dow Jones industrial average was 0.84% firmer at 43,771.06 points and the S&P 500 was up 0.26%. Markets were also firmer in Europe.
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