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Economics

Weak Rand, Government Missteps Deny South Africans Rates Relief

  • Borrowing costs have more than doubled since November 2021
  • SARB won’t intervene directly in currency market: Kganyago
The governor said the central bank has no intention of intervening directly in markets to alleviate pressure on the rand and stem rising bond yields.   

The governor said the central bank has no intention of intervening directly in markets to alleviate pressure on the rand and stem rising bond yields.   

Photographer: Leon Sadiki/Bloomberg

South Africa’s central bank is reluctant to pivot away from policy tightening after raising its benchmark interest rate into restrictive territory amid rand weakness and government missteps that continue to fuel inflation. 

The monetary policy committee delivered its first back-to-back half-point increase in 15 years in the wake of a diplomatic row between Pretoria and the US that weighed on South Africa’s currency and government bonds. The rand has also come under pressure because of power outages and logistics-network constraints that sapped economic growth, the slow pace of economic reforms and concerns about a deterioration in fiscal metrics.