Uhm - I told you that the SARB is likely to increase rates

In the previous post I discussed what the SARB intends to do with interest rates. The MPR 2015 documented hinted at an increase in many places. This is exactly what the SARB did - it increased the repo rate by 25 basis points to 6 percent. It is strange considering that the latest inflation is 4.7%...

The hike could only mean that the SARB anticipates higher inflation from various underlying pressures and that it thinks it right to act now (or the SARB is simply importing foreign monetary policy decisions...Brazil!). It should be interesting to see how the economy responds - watch out mortgage defaults, debt service costs and household consumption expenditure.