South Africa: Double Rate Hike Looms ! |
Reserve Bank Governor Tito Mboweni has warned that interest rates may rise by up to two percentage points at the Bank’s policy meeting next month, after news yesterday that inflation had accelerated to a new five-year peak last month.
“Two hundred basis points is possible … we need to move very strongly now,” he told Bloomberg after speaking at the Gordon Institute of Business Science late yesterday.
The Bank has not raised interest rates by two percentage points in one go since 1998.
Official data earlier in the day showed that the annual rise in the CPIX inflation gauge — which is what drives monetary policy — surged 10,4% last month, above 10,1% in March and forecasts for a dip to 10%.
That was its fastest pace since December 2002, and marked the 13th month in a row that CPIX, which excludes mortgage costs, has breached its 3%-6% official target range.
“You don’t have to be a genius to tell that interest rates have to tighten … with CPIX at 10,4%, drastic measures are required,” Mboweni said .
Mboweni’s tone appeared to be flippant, but he told the seminar he had “tested” the idea of a 200-basis-point hike with his colleagues.
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