South African interest rates are on lower trend

The upswing in commodity prices is a positive for South Africa despite the ongoing underperformance of gold. In September last year, at the height of the emerging markets crisis, interest rates were put up to 22% to prevent currency outflow as the government had no foreign currency to shore up the rand. As the global economy improves, interest rates have now been brought down to 15% and inflation should be a respectable 5% this year. With the prime overdraft rate at 16%, Michael Hughes, head of emerging markets for Flemings, estimates GDP growth should be 0.5% this year, rising to 4% to 5...