JOHANNESBURG, May 23 (Reuters) - South Africa's rand steadied against the dollar in late afternoon trade on Wednesday, recovering from losses earlier in the session, as a rise in consumer price inflation (CPI) reduced prospects for further interest rates cuts.
At 1515 GMT, the rand was trading at 12.5650 against the dollar, not far off its close of 12.5625 on Tuesday. It had earlier weakened to a session low of 12.7050.
South Africa's CPI jumped to 4.5 percent in April as a higher rate of value added tax and a sharp increase in fuel prices wiped away the previous month's dip in prices.
"The South African Reserve Bank has acknowledged the favourable trend in inflation and growth in the early months of 2018, lowering the repo rate by 25 basis points in March," said Elize Kruger, an economist at NKC African Economics.
"However, given the forecast of an upward trend in consumer inflation from here onwards, we forecast no further interest rate cuts, but that interest rates could remain unchanged at this level for a prolonged period."
The central bank is expected to keep rates unchanged at 6.5 percent on Thursday, according to a Reuters survey of 25 economists.
The focus for markets this week is also on S&P Global Ratings' sovereign ratings review on Friday.
In fixed income, the yield on the government bond due in 2026 fell 3 basis points to 8.52 percent, reflecting firmer prices.
Stocks tanked as investors across the globe sought refuge in safe havens on jitters about setbacks to U.S.-China trade talks.
Scandal-hit retailer Steinhoff set the tone, falling nearly 8 percent after saying it had repaid about 2 billion euros ($2.3 billion) of its debt in Africa after its local unit used the proceeds of a fundraising to pay back 16 billion rand ($1.3 billion) in shareholder loans.
The retailer has been fighting for survival after it discovered accounting irregularities in December, which sparked a sell-off in its shares that wiped more than $10 billion off its stock market value and led to multiple investigations globally.
The benchmark Top-40 index fell 2 percent to 50,599 points, while the wider All-share index shed 1.9 percent to 57,043 points. (Reporting by Olivia Kumwenda-Mtambo and Ed Stoddard; Editing by Mark Potter)