Politicians will intensify pressure on SARB to soften interest rates blow: Economist

Chief economist at Standard Bank, Kevin Lings, has warned that politicians will intensify their pressure on the South African Reserve Bank (SARB) to force it to soften the blow that rising interest rates have on inflation in a weak economy.

The cost of living has continued to rise, as the petrol price increases by 51 cents per litre of both grades. The price of diesel is up by R1.43 cents a litre to R25.49 cents a litre – which is a new record high.

Meanwhile, SARS Governor Lesetja Kganyago on Monday said they would continue using interest rates to curb inflation.

Kganyago also responded to calls for its mandate to include promoting economic growth and creating jobs.

Lings says the bank is in an extremely tight spot.

“I think they are under pressure already from general pushback because I guess people struggle to understand what they are trying to achieve when they put up interest rates in an economy that is already very weak. So, there would be general pressure from a political point of view.”

“I think what helps the Reserve Bank enormously is that the President, together with the National Treasury and the Minister of Finance, would understand that role extremely well. To some extent they would be protecting the bank from some of that political pressure,” Lings says.