We have lift off – SARB hikes rates

In what was arguably the most anticipated rate decision in years, the South African Reserve Bank Governor, Lesetja Kganyago, announced the Monetary Policy Committee’s decision yesterday to hike interest rates from the end of this month.

After almost 20 months of ultra-accommodative policy by the SARB, where rates have been held at multi-decade lows since the beginning of the COVID pandemic early last year, this hike signals the beginning of expected upward movements in rates over the coming years.

The hike comes amid increasing concerns around potentially higher inflation and consumer prices. Given the forward-looking view of inflation and the extent to which it can be a damaging force on household finances, the decision to raise rates appears to be appropriate.