The JSE along with its global peers slide lower ahead of the long weekend as the European Central Bank and the Bank of England followed the US Federal Reserve’s lead and hiked its interest rates on Thursday.
The JSE slumped 1.76% lower while at 17:17 the rand was trading nearly 2% lower at R17.46 against the US dollar.
The Bank of England raised its key interest rate by 50 basis points to a 14-year high of 3.50% as it tries to tame inflation without sending the UK economy into a recession.
The latest interest rate increase was less than the 75 bps hike at the bank’s previous monetary policy committee meeting and reflects the fact that quarterly GDP growth has been negative for the past three months but also that inflation remains uncomfortably high.
Similarly, the European Central Bank echoed the Bank of England’s inflation fight and raised its interest rate by 50 bps as well, bringing the rate it pays on bank deposits to 2%.
The hawkish Federal Reserve stance, which increased its interest rate by 50 bps the previous day, depressed the price of oil on Thursday with brent crude futures falling.
