South Africa’s central bank is set to raise interest rates to a 13-year high to fight rising inflation.
South Africa’s central bank is set to raise interest rates to a 13-year high as the increasing cost of dealing with severe power outages further de-anchor inflation expectations and cripple the economy.
The South African Reserve Bank “faces an unenviable conundrum of higher inflation forecasts plus higher risks, downgraded gross domestic product expectations, and global jitters around some of the unintended consequences of tighter financial conditions in the short term,” said Jeffrey Schultz, BNP Paribas’s chief economist for the Middle East and Africa.
Africa’s most-industrialized economy is suffering its worst-yet electricity rationing, with state utility Eskom Holdings SOC Ltd. implementing rolling blackouts of as much as 12 hours on all but one day this year, according to data compiled by Bloomberg. The outages prompted the International Monetary Fund to cut its 2023 economic growth forecast to 0.1% from 1.2%.
Average price-growth expectations for the year increased to 6.3% in the first quarter from 6.1% previously, according to a survey of business people, labour unions and households conducted by the Bureau for Economic Research.
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