THE Reserve Bank could this year be
compelled to raise interest rates more frequently than last year to
prevent the rand from pushing up prices, economists said.
This trend could start at the Bank’s first meeting of the year at the end of this month.
At 5.08pm on Monday, the rand was at R16.6565/$ after hitting a record low of R16.7695/$ earlier in the day.
A weak rand stokes inflation and could encourage the Bank’s monetary policy committee to raise interest rates.
Rate hikes attract investors to buy South African assets including the rand, firming the currency. A firmer rand, in turn, eases the pressure on price increases slightly.
The recent "massive underperformance" of the rand made a 50 basis points rate increase later this month a "distinct" possibility despite weak economic growth, said ETM Analytics economist Manisha Morar.
This trend could start at the Bank’s first meeting of the year at the end of this month.
At 5.08pm on Monday, the rand was at R16.6565/$ after hitting a record low of R16.7695/$ earlier in the day.
A weak rand stokes inflation and could encourage the Bank’s monetary policy committee to raise interest rates.
Rate hikes attract investors to buy South African assets including the rand, firming the currency. A firmer rand, in turn, eases the pressure on price increases slightly.
The recent "massive underperformance" of the rand made a 50 basis points rate increase later this month a "distinct" possibility despite weak economic growth, said ETM Analytics economist Manisha Morar.
