South Africa Bonds Fall as Inflation Fuels Bet Rate on Hold (bloomberg.com)

By Garth Theunissen

March 24 (Bloomberg) -- South Africa bonds fell and the rand weakened as inflation figures released today fueled speculation the central bank won’t cut its benchmark interest rate further.

Headline inflation slowed to 5.7 percent in February, from 6.2 percent the previous month, Pretoria-based Statistics South Africa said on its Web site. The growth in prices was in line with the median estimate of 23 economists surveyed by Bloomberg.

“It’s not a bad number but it’s not low enough to justify another rate cut,” said Victor Mphaphuli, a portfolio manager at Stanlib Asset Management in Johannesburg. “Yields are rising because the market was hoping for a much better number.”

The benchmark 13.5 percent bond due September 2015 fell 21 cents to 123.21 rand and traded by 9:39 a.m. local time, pushing up the yield on the security by three basis points to 8.15 percent. The rand weakened 0.4 percent to 7.3552 per dollar, from a close of 7.3250 yesterday.

The South African Reserve Bank, which targets inflation of 3 to 6 percent, has cut its key rate by 5 percentage points since December 2008 to revive the economy as inflation slowed. Economists said policy makers will probably leave the rate unchanged at 7 percent for a fifth consecutive meeting tomorrow on signs of recovery, according to a Bloomberg survey...

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