May 1, 2016

How South Africa’s Interest Rates Reflect External Pressures

   May 1, 2016

How South Africa’s Interest Rates Reflect External Pressures

South_Africa_Reserve_Bank_key_interest_rate_Data_TMMChart.png

Trader’s remarks: South Africa has been raising its key interest rate in a supportive move for the rand, which has been whacked by slowing growth and declining confidence in the country’s investment outlook. The South African economy has been under tremendous pressure from the commodities rout and a general deterioration in sentiment towards emerging markets. The central bank admitted that it faced the dilemma of high inflation and worsening growth outlook, but ultimately decided to raise rates as it remained focused on its mandate of maintaining price stability. Investor confidence has been tested over the last few months since President Jacob Zuma fired his well-respected finance minister in favour of an unknown backbencher.

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