The USD/ZAR currency pair rebounded from a fresh 5 1/2-month low of 17.7807 on Tuesday ahead of the outcome of the South African Reserve Bank’s (SARB) policy decision.

The SARB is largely expected to lower its benchmark interest rate by 25 basis points to 7.25% at its May 29th meeting.

The central bank paused its rate-cutting cycle in March, citing risks such as the Trump administration’s global trade war and local budget disputes.

South African CPI inflation, at 2.8% YoY in April, has been contained, as it remains below the SARB’s 3%-6% target range.

The SARB projects headline inflation to be at 3.6% this year and at 4.5% in 2026.

There had been speculation that Finance Minister Enoch Godongwana would announce a lower inflation target in last week’s budget. However, such was not provided.

Investor focus will also likely be on US PCE inflation figures for more clues on the Federal Reserve’s interest rate trajectory.

The FOMC minutes release is another highlight this week.

The USD/ZAR currency pair was last up 0.35% on the day to trade at 17.8915.