The South African Reserve Bank (SARB) is expected to maintain a dovish policy stance over the remainder of 2020, and to also reduce its benchmark policy rate [interest rate]] by a further 50 basis points [0.50%], to 3.25%, in 2020.

The move is to implement further stimulus in 2020.

The SARB has already cut repo by 275bps in 2020, including a 100bps reduction at an unscheduled meeting in April 2020.

“Amid some signs of a shift in voting patterns—committee decisions between January and April were unanimous, but at the May meeting three members preferred a cut of 50bps and two preferred a cut of 25bps—we expect a slower pace of reductions over the remainder of the year’, Fitch Solutions said.

Fitch also said that “Consumer price inflation will remain well within the SARB’s 3.0-6.0% target range over the coming quarters, facilitating further monetary stimulus.

Inflation moderated to 4.1% year-on-year in March 2020, from 4.6% in February—the lowest level since December 2019.

The decline was chiefly driven by slowing prices for fuels (down to 5.5% from 12.7% in February) and transport more generally (3.4%, down from 6.2% in February).

This reflected falling oil prices amid the Covid-19 pandemic.