South Africa’s rand weakened on Thursday after the central bank raised its main lending rate by 25 basis points to 7.25%, less than expected by most economists polled by Reuters.
At 1522 GMT, the rand traded at 17.1600 against the dollar, 0.31% weaker than its previous close.
The South African Reserve Bank (SARB) played it cautiously with the latest rate hike, suggesting it is nearing the end of a tightening cycle that started in November 2021, analysts said.
“The decision to scale back on the pace of tightening comes against the backdrop of slowing growth. That said, we expect one final 25 bps rate hike in March, after which the SARB is expected to leave rates on hold until the second half of the year,” said ETM Analytics in a research note.
The central bank now forecasts the economy will grow 0.3% in 2023 and 0.7% in 2024, a worse prediction than at its last MPC meeting in November, amid a backdrop of worsening power cuts.
It sees consumer inflation of 5.4% in 2023 and 4.8% in 2024, it said on Thursday.
In the equities market, the Johannesburg All Share index climbed 0.98% to 80,508 points, while the Top-40 index rose by 1.04% to 74,479 points.
Read also; South Africa’s Inflation Slows Down to 7.4% in November 2022.
