Surprise Repo Rate Hike
The SA Reserve Bank surprised us by raising interest rates by 0.25%, the first hike since early 2016 - bringing the repo rate to 6.75% and the prime lending rate to 10.25%. SARB argued that it was a risk mitigation strategy, clearly trying to avoid stagflation (which is high inflation, low economic growth and high unemployment), and is difficult to manage. The Rand strengthened dramatically from 13.95 against the USD to 13.73, MPC growth predictions for the year was lowered to 0.6% (prev 0.7%) and kept the same for 2019: 1.9% and 2020: 2%. Anthea threatened to put Gareth’s name forward to SARB as they are looking for another external MPC member.