As many economists had anticipated, the Reserve Bank went ahead with another -25bpt rate cut, the sixth in the current downward phase of interest rates, taking the cumulative quantum of rate cuts in the past 14 months to 150 bpts. The repo rate was reduced to 6.75% from 7.00% previously, resulting in the prime overdraft rate declining to 10.25% from 10.50%. It was always going to be a close call, and the Reserve Bank admitted to the possibility of Dollar strength and Rand weakness in the event of a major correction in international financial markets. However, in the converse direction, it was clear from comments made by the Reserve Bank Governor Lesetja Kganyago, that the entrenchment of responsible fiscal policy in the MTBPS delivered last week and the implicit acknowledgement thereof in the upgrading of the country’s credit rating by S&P Global, had enabled the Bank to feel that it no longer needed to keep interest rates as high to compensate for unduly loose fiscal policy. The rate cut was also in line with the warranted interest rate forecasts implicit in the Quarterly Projection Model (QPM). This model suggests a further two to three rate cuts of 25bpts next year, but we would not see such an outcome as certain. We would be slightly more cautious about forecasting rate cuts of this magnitude, given the volatility in global financial markets.