Higher oil prices and the sharply weaker rand do look scary from an inflation perspective, but analysts say the Reserve Bank will not act prematurely by hiking interest rates. SA’s repo rate is now 6.5% and the prime lending rate 10%. Higher inflation usually necessitates rate increases, with Argentina hiking interest rates by 15 percentage points to 60% on Thursday. Turkey has not raised rates since the sharp fall of the lira in August, but is accommodating investors by "informal hikes". "We are not in the same position as Argentina or Turkey as our central bank has credibility," said Sasfin Wealth fixed income trader Alvin Chawasema. The Bank would only act if second-round effects became noticeable through price rises in the economy itself, and not because of some external shock, he said. "For this, the Bank does not look at historical data in its rate decision, but looks forward to what the situation will be in 12 to 18 months from now," he said. Bond market According to Chawasem...
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