South Africa is now in the grip of an interest rate squeeze, with rates having risen sharply since the start of the year in absolute terms and relative to what was expected. Despite a bigger-than-expected decline in the April inflation rate to 6.8% year-on-year from 7.1%, the SA Reserve Bank’s Monetary Policy Committee (MPC) raised the repo rate by 50 basis points to 8.25% in a unanimous decision. It was 7% at the start of the year and 3.5% at the bottom of the cycle. It is also now above the average for the past decade of 5.7%.