The Reserve Bank has sounded a warning that it might have to resort to further interest rate hikes if US monetary policy in the Trump era hits the rand hard and drives up inflation. Ahead of Moody’s update on SA’s credit rating due on Friday and that of S&P Global Ratings next Friday, the Bank’s monetary policy committee, which kept interest rates on hold, also warned that the rand remained sensitive to the sovereign ratings announcements. The rand has tended to be highly responsive to US monetary policy, and while the Federal Reserve is widely expected to hike interest rates at its December meeting, uncertainty about president-elect Donald Trump’s economic policies has raised the prospect that the Fed might have to keep hiking, which could see the dollar strengthening further and emerging market currencies coming under pressure. It made it clear, too, that the inflation trajectory was still "uncomfortably close" to the top of the 3%-6% target range. The rate is expected to average ...
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