Analysts say a rate hike of 50 basis points is on the cards when the Reserve Bank announces its decision on interest rates Thursday afternoon.
They say the recent weakness in the rand will be one of the main drivers behind a likely decision to hike interest rates.
The Reserve Bank has increased rates by 425 basis points since November 2021. The repurchase rate currently sits at 7.75% while the prime lending rate is at 11.25%.
Economist Laura Campbell says, “The recent blowout in the rand exchange rate following allegations that South Africa had provided arms to Russia. We’re likely to see a strong response from the Reserve Bank this week and we’re expecting that it will increase interest rates by at least 0.5% to stabilise capital outflows as the SARB will be well aware of the potential pass-through of such a weak exchange rate. Further rate increases are also on the cards beyond this week’s expected 0.5% rise.”
On Thursday, the US dollar is trading at R19.30; the Pound Sterling is worth R23.82; the Euro is for R20.72; and the Australian dollar is at R12.60.
On the commodities market, platinum is trading at $1 020 dollars and gold at $1 956 per ounce, while Brent crude oil is at $78.20 a barrel.
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