South African rand plunges on surprise central bank decision to hold rates
EZA•Johannesburg shares trim losses
The Johannesburg Stock Exchange pared losses after the rate decision. The All-Share Index was last down 0.8% whereas it had been down about 1.8% before the decision was announced.
Inflation outlook and policy stance
Investors and economists had predicted the South African Reserve Bank would tighten policy because inflation has risen well above its 3% target, hitting 5% year-on-year in June.
But SARB Governor Lesetja Kganyago struck a less hawkish tone than expected at a press conference, saying policy was restrictive enough. The bank lowered its inflation forecast for this year to 4.0% from 4.4% previously.
Rand falls after surprise rate hold
South Africa's rand sank on Thursday after the central bank unexpectedly left its benchmark lending rate unchanged, a shock to financial markets which had priced in another rate hike.
At 1418 GMT the rand traded at 16.7125 against the dollar, about 1.9% weaker than its previous close and near its lowest against the U.S. currency in two months.
