If SA interest rates do rise today, blame Donald Trump

By Alec Hogg

Controversial US president Donald Trump has a small but vociferous fan club in South Africa. Judging by my inbox, these worthies lash out when one dares criticise their heir. To them, Trump is the antidote to much which is wrong in the world. He is a disruptor whose arrival was long overdue.

But later today, local Trump acolytes might be given pause. As it does six times a year, the SA Reserve Bank’s monetary policy committee will announce this afternoon whether it will adjust the country’s interest rates. After The Donald’s attack on China yesterday, the prospect of SA borrowers being forced to pay more has risen from zero to very possible.

Trump trade war
U.S. President Donald Trump. Photographer: Andrew Harrer/Bloomberg

The back story is nicely unpacked in my latest Rational Perspective podcast. Trump insider Steven Moore confirms that tariffs on Chinese goods (10% next week; 25% from January) is the fulfilment of a long-term strategy. In Trump’s worldview, a showdown between the US and China is inevitable. With other trade relationships settled, now’s the time to force the issue.

It’s all rather disgusting. America houses 5% of the world’s population. They possess 25% of global wealth, legacy of the early adoption of the most efficient economic system. Trump wants to keep it that way. If he puts the global economy into recession, tough. My favourite economist Nouriel Roubini calls the tariffs a “disaster”. For SA’s small and open economy, it could be even worse.


  • UPDATE: The SARB MPC opted to keep rates on hold, with four members voting for rates to remain unchanged, defeating three votes for a rate hike.