JOHANNESBURG, Jan. 29 (Xinhua) -- South Africa's Reserve Bank governor Gill Marcus on Wednesday announced a 50 basis point interest rate hike to 5.5 percent, amid fears of inflation pressures and a weaker rand.
The South African central bank made the surprise decision at a scheduled policy meeting, citing projections of inflationary pressures of over 6 percent in the second quarter and even higher in the fourth quarter of 6.6 percent.
Marcus told reporters here that the primary responsibility of the bank is to keep inflation under control and ensure that inflation expectations remain well anchored.
It is the first change in the repo rate of Africa's biggest economy since July 2012 and the first hike in almost six years.
Soon after the announcement, the rand, took a knock, sliding to 11.25 against the dollar, its five-year low. The rand has depreciated 10 percent since December.
The rand's weakness is in line with the turbulence of other emerging market currencies, although its depreciation is being worsened by mining strikes.
Thomas Zulu, an economist with EM Matix, said South Africa had no choice but to follow its peers as "Turkey, which is particularly hard hit by the sell-off, had sharply increased interest rates to protect its currency."
However, Marcus said, "the hike is not intended to support the rand."