Africa's Biggest Economy Set to Hike Interest Rates on War Shock as Peers Hold South Africa is poised to join a handful of central banks in raising interest rates to contain the inflationary fallout from the Iran war in coming weeks, even as most peers keep borrowing costs on hold. (Bloomberg) — South Africa is poised to join a handful of central banks in raising interest rates to contain the inflationary fallout from the Iran war in coming weeks, even as most peers keep borrowing costs on hold. The conflict that erupted in late February has driven up energy, food and fertilizer costs due to the blockade of the Strait of Hormuz — a key shipping route for about a fifth of the world’s seaborne oil and liquefied natural gas, and a significant portion of crop nutrients. tap here to see other videos from our team. Back to video A number of African nations have raised fuel prices, with some deploying subsidies and suspending taxes to soften the blow. The higher costs and knock-on effects have forced policymakers to rethink extending their easing cycles that looked likely just months ago, with the possibility of rates remaining higher for longer. “All of Africa’s central banks are having to make a big shift on policy,” said Charlie Robertson, chief economic adviser at Equity Group Holdings Plc. “Across the continent nearly all central banks will at best be on hold in coming months, but hikes will become commonplace unless Hormuz is re-opened.” Policy will likely remain restrictive, with further tightening contingent on a more pronounced inflation impulse, although fragile economic growth across several economies will constrain the ability to tighten aggressively, according to Angelika Goliger, EY Africa’s chief economist. For a calendar of forthcoming interest-rate decisions in Africa, click here. The wave of interest-rate decisions will start with Ghana, Mauritius and Nigeria on Wednesday, followed by Egypt and Rwanda on Thursday. Ghana’s policymakers are expected to join a small group of African nations, including Zambia and Angola, in cutting interest rates. Inflation, while edging higher in the West African nation, remains subdued at 3.4% and borrowing costs are restrictive at 14%. The central bank is forecast to lower the benchmark rate by 50 basis points, extending an easing cycle that began in July. Monetary policy committees in Mauritius, Nigeria and Egypt are all set to stand pat. Policymakers in Mauritius and Nigeria, who are meeting for the first time since the conflict began, will likely seek to gain greater clarity on its impact, with price pressures already intensifying. Egypt is also set to remain cautious as currency weakness and administered-price adjustments reinforce inflationary risks and limit the scope for easing, Goliger said. Rwanda and — a week later — South Africa will likely raise interest rates. Botswana is so far the only African nation to do so since the war began. Price growth in Rwanda has returned to double digits for the first time in almost three years, pushing the gap between the benchmark interest rate and annual inflation to negative 5.75 percentage points. News PMN Business - Advertisement 1Story continues below Real Estate Personal Finance - Personal Finance Two taxpayers in trouble with CRA over TFSAs got their day in court. One went well, the other did not South Africa is predicted to raise interest rates by 25 basis points to 7%. An increase would be the first since May 2023. “The balance of risks has shifted towards a more hawkish direction, with easing effectively off the table and the possibility of an increase in the policy rate in 2026 should inflation pressures intensify,” Goliger said. Inflation is forecast to surge above the central bank’s 3% target in April and May because of higher fuel prices. The rates call in Africa’s largest economy will weigh on neighboring Eswatini and Lesotho, whose currencies are pegged to the rand and are set to announce their own decisions a day later. Mozambique will deliver its rate decision next week and Kenya, on June 9, and both are expected to remain on hold. The two nations are net fuel importers and have seen inflation quicken because of higher energy costs, which have sparked protests in Kenya and further strained Mozambique’s budget. Sign up here for the daily Next Africa newsletter and subscribe to the Next Africa podcast on Apple, Spotify or anywhere you listen. —With assistance from Simon Lee.
Africa's Biggest Economy Set to Hike Interest Rates on War Shock as Peers Hold South Africa is poised to join a handful of central banks in raising interest rates to contain the inflationary fallout from the Iran war in coming weeks, even as most peers keep borrowing costs on hol…
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The Houthis in Yemen have announced a blockade of Saudi Arabian shipping through Red Sea ports, including at the Bab el-Mandeb strait. The group, described as Iran-backed, stated the measure would target the top oil exporter following recent exchanges of fire.
Reports indicate this could add to existing maritime disruptions in the Strait of Hormuz linked to US-Iran confrontations.
A Reuters poll of economists conducted July 7-16 shows that most Gulf Cooperation Council economies are now projected to contract more sharply in the current year than estimated three months earlier, with median forecasts indicating declines of 8.1% for Kuwait and Qatar, 5.
1% for Bahrain, and 0.5% for the UAE. Saudi Arabia and Oman remain the only GCC economies expected to expand. The poll links the revisions to reduced export volumes through the Strait of Hormuz, higher freight costs, and weaker investor sentiment, even as oil prices have risen.
Initial reports indicate that a limited number of vessels transited the waterway during the first full day after the United States implemented a naval blockade of Iran. These observations have not been independently verified.
The head of the UN’s nuclear agency yesterday signaled that Iranian nuclear enrichment sites would be visited by his inspectors, a key component in the interim deal between the US and Iran to reach an end to their war. The comment by International Atomic Energy Agency (IAEA) Director-General Rafael Grossi was the firmest yet from the agency, which is viewed as key in determining the status of Iran’s nuclear stockpile.
Since Israel launched a 12-day war on Iran last year, the IAEA has been blocked by Tehran from visiting enrichment sites where the Islamic republic is believed to store enough highly enriched uranium to potentially build as many as 10 nuclear weapons.
Photo: AP Iran has said that its program is peaceful, although it would be the only country in the world to have uranium enriched up to 60 percent purity without a weapons program. The US and Iran offered contradictory remarks on Tuesday about whether those sites would be inspected.
“I can understand political statements, they are part of the reality, but the fundamental thing I would like to remind you and draw your attention to is that there has been a memorandum of understanding, signed by both presidents,” Grossi told journalists at a news conference at the Fukushima Dai-ichi nuclear power plant.
The accord “explicitly states that the nuclear activities that are going to be carried out with the regards of the nuclear material facilities will be supervised by the IAEA — in all letters,” he said. “Obviously, to do that, we have to inspect,” Grossi added.
BOOST: By operating the same advanced systems as the US military, Taiwan would be better positioned to share and integrate intelligence with partners, an expert said The first batch of MQ-9B SkyGuardian drones has arrived in Taiwan, and is being assembled and tested by drone manufacturer General Atomics and the military ahead of flight trials as part of the air force’s acquisition to bolster its aerial surveillance capabilities, a source said yesterday.
The air force allocated a budget of NT$21.7 billion (US$687 million) from 2022 to 2029 to procure four MQ-9B uncrewed aerial vehicles (UAVs) manufactured by General Atomics along with associated equipment such as ground control stations. The US has agreed to deliver the four MQ-9Bs to Taiwan in two batches this year and next ‘BRAZEN’: The holiday did not stop China from activities that infringe on Taiwan’s maritime jurisdiction, but the CGA is ready to defend the nation, Kuan Bi-ling said Beijing is intensifying maritime pressure on Taiwan, but the nation will never yield, Ocean Affairs Council Deputy Minister Sung Chen-en (宋承恩) said.
The Coast Guard Administration (CGA) has adopted a “shadowing and monitoring” approach to avoid falling into a Chinese trap to escalate tensions and deepen the conflict, Sung said in an interview published yesterday in the Chinese-language Liberty Times (the Taipei Times’ sister newspaper).
China Coast Guard formations patrolling waters east of Taiwan, as well as official Chinese vessels entering areas around Itu Aba Island (Taiping Island, 太平島) and Pratas Islands (Dongsha Islands, 東沙群島) show Beijing’s attempts to significantly step up Taiwanese firms’ China investments have dwindled to less than 1 percent of their total foreign investments, putting China-based investments on track for a record low this year, Ministry of Economic Affairs data showed.
Taiwan’s investments abroad in the first five months of this year reached US$35.92 billion, Department of Investment Review data showed. Investments outside China totaled US$35.61 billion, up 133.94 percent year-on-year, while investments in China totaled US$310.
3 million, down 32.3 percent and about 0.86 percent of the total, data showed. Major overseas projects included Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$30 billion capital injection into an overseas subsidiary, VARYING OPINIONS: People with different political affiliations have different views on how bilateral ties with the US, Japan and China would affect Taiwan’s security Two-thirds of Taiwanese view closer US and Japan ties as beneficial to security, a survey by Taiwan’s top military think tank showed.
To gauge the Taiwanese public’s perceptions of how different external relationships affect security, the Institute for National Defense and Security Research commissioned a survey by National Chengchi University’s Election Study Center asking respondents whether closer relations with the US, Japan and China would strengthen or weaken Taiwan’s national security.