South African inflation expectations fell to an almost four-year low, providing policymakers with another reason to press ahead with their easing cycle.

Average inflation expectations two years ahead — which the central bank’s monetary policy committee (MPC) uses to inform its decision-making — slipped to 4.5% in the second quarter from 4.7% previously, according to a survey released on Wednesday by the Stellenbosch-based Bureau for Economic Research.

The MPC prefers to anchor inflation expectations at the 4.5% midpoint of its target band, and is in talks with the National Treasury to adjust the goal to 3%.

The data combined with low inflation bolsters the case for the panel to again cut the key interest rate by 25 basis points to 7% when it delivers its next decision.

Forward-rate agreements, used to speculate on borrowing costs, are pricing in 18 basis points of cuts at the July 31 meeting, or a 72% chance of a 25-basis-point reduction. The contracts are pricing in a further 14 basis points of cuts in the remainder of the year, implying a 56% chance of a second 25-point reduction.

Governor Lesetja Kganyago said Tuesday that South Africa’s inflation rate that’s been hovering near or below the floor of the MPC’s 3%-to-6% target range for eight consecutive months is creating “opportunistic disinflation” that will help policymakers to anchor price expectations at a lower level.

Kganyago is comfortable with the trajectory of South African inflation, though he said the outlook remains clouded by uncertainty stemming from geopolitical tensions, including US President Donald Trump’s trade war. These risks warrant the central bank’s current policy stance, which he characterised as still restrictive while being fairly close to a neutral setting that neither heats nor cools the economy.