The Monetary Policy Committee (MPC) of the South African Reserve Bank raised the official interest rate by 0.5%. Higher than expected global interest rates and persistent inflation led to all five members of the MPC voting for this increase. It takes the repo rate to levels last seen in 2009 when interest rates were raised aggressively to counter the effects of the housing bubble which led to the global financial crisis.
Despite the increase in interest rates the rand weakened by -7.7% against the US Dollar in May. This recent pronounced weakness of the Rand reflects a combination of factors including renewed concerns about SA government finances, international reports that the SA government granted Putin and the BRICS leaders diplomatic immunity ahead of the BRICS summit in SA on 22-24 August, and an accusation from the US ambassador in South Africa that arms and ammunition had been loaded onto a Russian military ship docked in Cape Town during December 2022. Read more
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