The South African Reserve Bank hikes interest rates by 25 basis points, on the back of a worsening inflation outlook. The primary causes of a worsening inflation output were ascribed to increasing global food prices, and a weakening Rand vs major currencies. Additionally, concern was raised over the impact of above-inflation wage settlements, which settlements are not matched with increasing labour productivity.
Nevertheless, the Bank was at pains to highlight the weak and worsening growth outlook, and the monetary policy dilemma presented thus. However, the Governor further noted that much of the growth downside was on account of strikes in the mining and manufacturing sectors, which issues cannot be addressed by monetary policy.