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SOUTH AFRICA: JP Morgan See First Policy Rate Cut in November

SOUTH AFRICA
  • JP Morgan note the impact of the newly-formed government of national unity on the outlook is relevant, even as they have not materially changed near-term forecasts. Much of the short-term macro-economic impact is via gains in confidence and FX, which may occur in a phased manner as it hinges on newsflow of progress in clearing contentious initial hurdles and teething pains in setting up a functioning GNU and joint strategy agenda, they say.
  • JP Morgan’s base case for 75bp in policy rate cuts by mid-25 with a first cut in November is now on safer footing, they say, adding contained upside risk to their 1.4% growth forecast for next year. Additionally, they see scope for about a 0.2-0.3ppt lowering in the SARB’s 2H25 and 2016 inflation outlook over the net two MPC meetings, presuming GNU momentum continues. Their base case is for a first policy rate cut in November, with about a 30% chance of a September move.

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