JOHANNESBURG (Reuters) – South Africa’s bond yields climbed sharply on Thursday and the rand was slightly firmer after Governor Tito Mboweni’s comments that drastic measures were needed to deal with high inflation. Yields on the 2010 bond were 36 basis points higher at 11. Mboweni said late on Wednesday drastic measures were needed to deal with inflation, and hinted that he was discussing the impact of a 200 basis point increase with his colleagues. When CPIX is above that (3-6 percent) range, clearly drastic measures have to be taken,” he said at a seminar at Gordon Institute of Business Science. The central bank has since June 2006 raised the repo rate on nine occasions — by 50 basis points each time — to 11. Independent market watchers ETM said in a note a 100 basis point increase in the rates would make the rand very attractive in carry trade and the currency could gain in the next few sessions, but local risks remained. read more

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