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SARB to stay on hold for some time: Danske Bank

Quotes from Danske Bank:

-At the monetary policy meeting in January, the SARB kept its repo rate unchanged at 5.75%. During 2014 the SARB emphasised that South Africa was in the process of interest rate normalisation (i.e. higher interest rates) to deal with inflation rates above the upper end of the inflation target of 3-6%.

-However, the lower inflation path in H2 2014 has paused this process and at the monetary meeting in January, the SARB decided to keep the repo rate unchanged at 5.75%.

-The SARB is aware of the fact that the current decline in inflation could generate expectations of interest rate cuts, but it stated that interest rate cuts would require a permanent decline in inflation. We expect the SARB to stay on hold for some time.

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