South Africa Crisis Is Eroding a Basic Rule of Monetary Policy
- Interest rate increases may harm the rand more than help it
- Rand’s drop is fanning predictions for inflation, rate hikes
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Things have got so bad in South Africa that one of the fundamental laws of monetary policy is beginning to weaken, and even break.
A crippling energy crisis, a low growth environment and deteriorating fiscal metrics combined to push the rand to a record low last week.