South Africa’s central bank kept its benchmark interest rate on hold, resisting market expectations for another hike after June inflation surged past its target.
The decision triggered a market sell-off, sending the rand down more than 2% — making it the world’s worst performing currency on the day — while benchmark bond yields rose. “The inflation outlook has improved slightly since our last meeting, but inflation is still too high, while growth is weak,” Governor Lesetja Kganyago said.
Economists predicted the pause may be short-lived. Citibank’s Gina Schoeman said she remained concerned by underlying inflation and maintained her baseline forecast for a 25 basis-point rate hike in September. The inflation spike has been driven primarily by higher energy costs, fueled by the Middle East conflict.
