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The SARB surprises again with a 100bps repo rate cut to 4.25%, the lowest ever and the first one anticipated by the Reserve Bank with a tweet, per TD Securities. USD/ZAR is trading at 18.2628.

Key quotes

“The SARB has cut rates again by 100bps today, lowering the benchmark repo rate to 4.25%, lowest on record. The meeting was unscheduled, and therefore unexpected by definition.” 

“The SARB now projects growth of -6.1% in 2020 (this compares to -0.2% only three weeks ago), followed by a rebound to 2.2% in 2021 and 2.7% in 2022.”

“As we expect a contraction of 7% in 2020, followed by a rebound to 2% next year, we think another 50bps of easing could be in store for the July meeting.”

“It is difficult to forecast a USD/ZAR level at this point, but we believe that the rand will remain one of the worst EM FX performers during the course of 2020.”