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Nedbank Expect SARB to Start Easing Rates from May Onwards

SOUTH AFRICA
  • Nedbank expect inflation to ease further in December, ending the year at 5.3%, again reflecting stable global oil prices and a firmer ZAR, which will translate into lower petrol prices. They forecast inflation to hover between 5% and 5.5% in the first half of next year before falling more convincingly towards the midpoint of SARB's target range during the third quarter and averaging 5% in 2024.
  • However, the risks to their forecasts reside marginally to the upside due to the uncertainties surrounding the outlook for oil prices, food prices and the ZAR.
  • Nedbank believe sluggish domestic demand will offset these risks and convince the SARB to start easing interest rates from May onwards, with four reductions totalling 100 basis points, taking the repo rate to 7.25% at the end of 2024.

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