Interest rates in South Africa will remain relatively low, but expectations are that they will increase at some point in the near future.
“The increase will not be by much, but it will increase,” said Dawie Roodt, chief economist at the Efficient Group. “When things go wrong in an economy it always results in higher inflation.”
Roodt said this was due to the recovering oil price and the weakness of the rand.
“My suspicion is that it will remain where it is in the short term, but over the medium and longer term there is really only one way it can go and that is down. We are forecasting a 5% depreciation on average against the US dollar over time because South Africa’s inflation is higher than that of the US.”
He said should President Donald Trump kick South Africa out of the African Growth and Opportunity Act (Agoa) the rand would take a serious knock.
