With the rand hitting a record R17.99 low against the US dollar today (Monday), it is likely that the South African Reserve Bank (SARB) will increase the repurchase rate by more than 25 basis points at its meeting at the end of the month, predicts the Bureau for Economic Research (BER).
This follows the repo rate increase of 25 basis points (to 6.25%) on 20 November last year.
In this week’s report, the BER’s Celeste Booysen pointed out that besides persisting internal issues, this was due to increasing concerns about the slowdown of the Chinese economy and subsequent global financial market volatility that weighed on the rand.
“The weaker rand, coupled with the intensifying local drought and resulting need to import food commodities in the near term, will put additional pressure on inflation and the economy in 2016,” said Booysen.
