South African central bank caution drives rand despite rate cut
Updates prices as of 1602 GMT, adds analyst comment in paragraphs 6-7
JOHANNESBURG, Nov 21 (Reuters) -South Africa's rand firmed on Thursday after the central bank opted for another small cut to its main interest, quashing hopes of a bigger move.
South Africa's central bank lowered its main rate ZAREPO=ECI by 25 basis points to 7.75%, as expected by economists polled by Reuters.
Data released on Wednesday showed inflation had dropped below the central bank's 3% to 6% target range, which boosted analyst bets of a potentially steeper reduction.
But central bank Governor Lesetja Kganyago said a 50 bps cut was not discussed and played up global risks and domestic price pressures.
At 1602 GMT, the rand traded at 18.0425 against the dollar ZAR=D3, about 0.4% stronger than its previous close.
"A 50bp move was never really on the cards, as the SARB was always going to look beyond the sharp slowdown in inflation evident in yesterday's CPI data and focus more on new price risks that are emerging," said Danny Greeff, co-head of Africa at ETM Analytics.
Greeff said that the central bank was unlikely to turn less cautious while there was still much uncertainty around U.S. President-elect Donald Trump's policy proposals and what effect they would have on inflation.
On the stock market, the Top-40 .JTOPI index closed 0.2% up.
South Africa's benchmark 2030 government bond ZAR2030= was stronger, the yield down 7 basis points at 8.975%.
Reporting by Tannur Anders and Bhargav Acharya; Editing by Jan Harvey and Alex Richardson
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