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S.Africa’s Marcus Says More Rate Cuts Can’t Be Taken for Granted

South African Reserve Bank Governor Gill Marcus said the prospect of a further reduction in interest rates can’t be taken for granted, reiterating comments she made two days ago.

“There is speculation whether this is the beginning of a trend,” Marcus said in a speech to the South African National Editors’ Forum in Durban, South Africa yesterday. “We regard this as the beginning of a cycle, but we cannot take this for granted.”

The Reserve Bank on July 19 cut its key interest rate by half a percentage point to 5 percent, the first reduction since November 2010, after inflation eased into the bank’s 3 percent to 6 percent target range while the economy faltered. The debt crisis in Europe, which buys about a third of South Africa’s manufactured goods, is threatening the growth outlook, Marcus said.

On July 27, Marcus said any further easing of South African monetary policy “is not automatic and will be highly dependent on global and domestic developments.”

Investors have increased bets Marcus will lower the benchmark rate again before the end of the year. Yields on forward-rate agreements due in December dropped 50 basis points, or 0.5 percentage point, in the past month to 4.75 percent on July 27 in Johannesburg.

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