Nog ‘n interest rate hike on the cards
The SA Reserve Bank. Photo: Bloomberg
It looks like there is another interest rate hike on the horizon, according to Bank of America.
In a new report by the banking institution, the South African Reserve Bank (SARB) may implement another hike by 25 basis points next month.
The research argues that global oil prices, the instability of the rand and the recent bird flu outbreak are the major reasons for a possible interest rate hike.
“A combination of rising oil prices, a higher-for-longer rates narrative and fiscal risks in emerging markets are likely to weaken emerging market currencies further, and a stronger dollar should continue to weaken the rand, in our view,” Bank of America stated.
Rising oil prices will therefore impact South Africa’s interest rate decision.
The impact of the ongoing war between Israel and Palestine has had a major impact on global oil prices.
Old Mutual Wealth Investment strategist Izak Odendaal said: “The war comes at a precarious moment for a global economy absorbing a record surge in interest rates.”
He notes that whenever there is upheaval in the Middle East, all that investors look at is the oil price.
“The Brent crude oil price rose immediately after Hamas launched its attacks, and fears of escalation drove it higher towards the end of the week where it closed at $90 per barrel,” Odendaal added.
At 10am, on Tuesday the price of Brent crude oil per barrel was $90.01 (R1 689.76).
Meanwhile, the daily snapshot from the Central Energy Fund (CEF) on Tuesday showed that South Africans can look forward to substantial fuel price cuts for November.
The unaudited CEF data points to a possible decrease of around R1.97 per litre for petrol, and 80 cents for diesel.