South African Reserve Bank chief Gill Marcus has given investors a bit of a shock.
After Turkey and India saw rate hikes yesterday, South Africa's policymakers have made a similar call.
They've hiked their repo rate by 0.5 percentage points to 5.5 per cent.
Markets suspected a hike when Marcus announced big upward revisions to inflation forecasts during her speech (given before the rate hike announcement), with the central bank now seeing inflation averaging 6.3 per cent in 2014.
There were downward revisions to the bank's growth outlook as well. 2014 is expected to see GDP growth of 2.8 per cent, rather than the three per cent forecast last November.
Marcus named Brazil, Russia, and Turkey as vulnerable currencies, saying that while South African's rand weakness is part of a wider emerging market phenomenon, there are also idiosyncratic risks to be aware of.
She said that the hike was not intended to affect rand - they're only interested in depreciation and the extend to which the hike will interact with inflation.
TRY(w) ZAR (y) HUF (g) all getting smashed in unison last 30 mins pic.twitter.com/l1cGTPGsse— Owen Callan (@OwenCallan) January 29, 2014