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(Bloomberg) -- South Africa’s central bank paused its easing cycle while it assesses the impact US President Donald Trump’s trade policies may have on inflation.
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The monetary policy committee maintained the benchmark interest rate at 7.5%, Governor Lesetja Kganyago told reporters at a briefing north of Johannesburg on Thursday. That matched the median estimate of 21 economists in a Bloomberg survey, in which 14 predicted the hold and the rest expected a cut.
The decision comes after three straight 25 basis point reductions that began in September and follows a pause by the Federal Reserve overnight. Four of the six members of the monetary policy committee favored keeping rates on hold.
“The world economy is experiencing extreme levels of uncertainty. Trade tensions have escalated, and longstanding geopolitical relationships are shifting abruptly. In these circumstances, the global economic outlook is unpredictable,” Kganyago said. “Globally we do not know where policy will end up.”
The rand held a decline of 0.4% against the dollar, while the two-year bond yield fell three basis points to 8.23% by 4:08 p.m. in Johannesburg. The benchmark stock index extended a decline.
South Africa’s annual inflation held steady at 3.2% in February, beating analysts’ forecasts for it to accelerate to 3.4%. That bolstered the argument for a rate cut — but it has been countered by a marked escalation in Trump’s rhetoric and tariff measures.
The American president also halted aid to South Africa over land laws he claims are unjust toward White South African farmers, among other complaints, and his administration last week expelled the country’s ambassador to Washington over disparaging remarks he made about the president. South Africa hasn’t confiscated any private land since the end of apartheid in 1994.
“While we had expected a cut today, we had also anticipated that risks would be finely balanced. It was not a high conviction call,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Plc. “At the end of the day, the global risks are real — and the SARB’s caution is justified. It does not close the door to one more cut, but further easing would need to be justified by the emergence of more benign global scenarios.”