South African rand slips, local rate decision in focus

JOHANNESBURG, May 26 (Reuters) - The South African rand weakened on Monday, with the central bank's interest rate decision likely to be the highlight this week.

At 1533 GMT, the rand traded at 17.86 against the dollar ZAR=D3, about 0.2% weaker than its previous close.

The South African Reserve Bank will announce its monetary policy decision on Thursday after pausing a rate-cutting cycle in March because of risks from U.S. President Donald Trump's global trade war and domestic budget disputes.

Economists polled by Reuters expect the bank to restart its rate cuts, trimming its repo rate by 25 basis points to 7.25% ZAREPO=ECI.

Inflation is well-contained, staying below the bank's 3%-6% target range at 2.8% year-on-year in April ZACPIY=ECI.

There had been speculation that the finance minister would announce a lower inflation target in last week's budget, but the absence of any such announcement in his speech could encourage the SARB's Monetary Policy Committee to ease policy.

Other local economic data releases this week include a leading business cycle indicator ZALEAD=ECI on Tuesday, producer inflation ZAPPIY=ECI on Thursday, and credit ZACRED=ECI, trade ZATBAL=ECI and budget ZABUDM=ECI figures on Friday.

On the stock market, the Top-40 .JTOPI index closed about 0.2% higher.

The benchmark 2030 government bond ZAR2030= was marginally weaker, as the yield fell 0.5 basis point to 8.89%.