The Benchmark Interest Rate Goes Up

SOUTH AFRICA - Report 23 Jul 2015 by Iraj Abedian
The South African Reserve Bank (SARB)’s Monetary Policy Committee (MPC) decided to increase the repo rate from 5.75 to 6.0% per year, effective Friday, July 24, 2015 (see Graph 1). Graph 1 Repo rate, South Africa, Jul ’13 – Jul ‘15 Source: SARB and PAIRS Today’s MPC decision appears to be largely informed by anticipation of a US interest rate hike later this year. A normalization of US monetary policy would potentially drive capital from risky emerging market economies’ assets back to US dollar-denominated assets. As a result, affected currencies will depreciate against the US dollar, pavin...

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