JOHANNESBURG, March 25 (Reuters) – South Africa’s rand firmed in early trade on Thursday, as investors awaited the outcome of a central bank monetary policy meeting later in the day, where the regulator is expected to leave its benchmark lending rate unchanged.

At 0610 GMT, the rand traded at 14.9275 against the dollar, 0.35% firmer than its previous close.

Data on Wednesday showing consumer price inflation in February dipped below the central bank’s target range of 3-6% did little to change market expectations that the central bank’s monetary policy committee (MPC) will not cut interest rates any further, keeping the rate at 3.5%.

“The local markets have traded cautiously over the week thus far, with the short-term price action in the rand somewhat confounding to market participants at both extremes of the price ranges,” analysts at Nedbank said in a note.

“This scenario is likely to continue ahead of the MPC, despite a consensus expectation of an unchanged decision.”

Emerging market central banks have come under increasing pressure in recent weeks from global rising yields, weakening currencies and rising inflation strains with policymakers in Brazil, Russia and Turkey delivering a surprise cumulative rate hike of 300 basis points last week.

This adds to signs that an easing cycle across emerging market central banks which started in 2019 and was the longest easing cycle since the 2008 financial crisis and the 2010 euro crisis – might be coming to an end.

The South African economy contracted 7.0% last year despite the Reserve Bank cutting interest rates by a cumulative 300 basis points to counteract the damage caused by pandemic-induced lockdowns.

In fixed income, with the yield on the benchmark government bond due in 2030 was up 4.5 basis points to 9.485% in early deals. (Reporting by Olivia Kumwenda-Mtambo; Editing by Rashmi Aich)

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