Interest rate hike inevitable: Economists

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Economist Azar Jammine is among his counterparts that have predicted that the Reserve Bank will raise interest rates by at least 25 basis points next week.

If the bank does hike interest rates after its Monetary Policy Committee meeting, it will happen in an environment in which the cost of living is continuing to rise. Consumers also have to deal with an 18.6 percent electricity tariff increase with effect from the first of next month.

Such a rate hike would also come after the US central bank raised interest rates by 25 basis points.

Jammine says the Reserve Bank has no choice but to hike interest rates.

“You know, we may just find that inflation around the world, including in South Africa, continues to prove more sticky than anticipated. But next week without doubt, 25 basis points and precursor was announced where the US Federal Reserve Board itself increased interest rates, the equivalent to the repo rate, by 25 basis points. So, there is no question in my mind that it is a done deal, we will get a rise in interest rates next week.”

Meanwhile yesterday, Statistics South Africa released data which shows that inflation is on the upside again.

Annual consumer price index increased from 6.9 percent in January to seven percent in February this year. Inflation increased by 0.7 percent on month-on-month in February.

Food inflation recorded the highest increase, by 13.6 percent year-on-year.

Transport inflation increased by 9.9 percent year-on-year.