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# The US raised interest rates, and South Africa’s response could impact your loans
- URL: https://www.businessbagel.com/fed-raises-rates-rand-falls-sarb-decides-23-september/
- Published: 2026-09-18T03:30:00.000Z
- Updated: 2026-09-18T03:29:59.000Z
- Description: The Federal Open Market Committee lifted American rates a quarter point on Wednesday, six days before South Africa's own rate-setters meet with a survey in front of them that was taken before any of it happened.
- Author: Christian Maidman
- Tags: Economy, Business Bagel News, #big

South African households have not expected inflation this low in nearly five years. Asked in the quarterly survey the Reserve Bank commissions what prices will do over the next twelve months, they said 4.9%, down from 6% three months earlier. The fieldwork ran from 17 August to 3 September. On the evening of 16 September the Federal Reserve raised American interest rates, which is the sort of thing a survey taken a fortnight earlier cannot know about.

The two are connected by the gap between what the two countries pay on their safest money. When American rates go up, dollar investments look better than they did, investors take money out of emerging markets like South Africa, and the rand is left with fewer buyers. That is what happened within minutes of the announcement, as it moved from R16.26 to above R16.34, against R16.02 a week earlier.

## What the Fed did, and says it will keep doing

The Federal Open Market Committee lifted its target range to between 3.75% and 4%, a quarter point higher, on a 12-0 vote. It was the first American rate increase since July 2023.

It came after core inflation ran hotter than expected in August, which fed a worry that price pressure has spread beyond import tariffs and the energy shock from the Iran war. Most officials on the new projections see at least one more increase before the year is out, and the committee pushed back the year it expects inflation to reach its goal of 2%, to 2029\. Its own forecast for American inflation this year went up, to 3.7%.

## Why 23 September is harder than it looked on Tuesday

South Africa's own rate has been 7% since the Reserve Bank raised it in May, and it stayed there through a surprise pause in July. The case for leaving it alone was already on the table: the economy shrank 0.2% in the second quarter, its first contraction after six quarters of growth.

Wednesday morning made that case easier. The Bureau for Economic Research's survey showed analysts, businesspeople and trade union officials trimming their forecasts, with the 2028 number down to 3.8% from 3.9% and the 2027 number easing too. Wage expectations barely moved, the growth outlook hardly changed, and the fall in household expectations ran across income groups rather than sitting in one of them.

Against that, inflation is still running at 4.3% against a 3% goal, energy and fertiliser prices are climbing on the back of the Middle East, and Amundi's Nicolas Dahan says a second hold in a row would start to cost the Bank credibility. Traders are close to evenly split, with forward rate agreements pricing the odds of a rise at 52%, down from 56% the day before. The survey the committee will be reading was taken before the Fed moved.