Goldman Sachs: Risk of war in Iran is weighing down on the outlook for the rand and interest rates.

Goldman Sachs economist Andrew Matheny believes that the consistently high oil prices may force the South African Reserve Bank to consider raising interest rates, as the depreciation of the Rand is pushing inflation above levels that it is prepared to tolerate. He warns that if a US war with Iran pushes oil prices to $130 per barrel and the assumption that interruptions in crude oil flow will not last long is proven wrong, the Rand may face sustained pressure. Unless the economy deteriorates sharply, this conflict is unlikely to significantly disrupt South Africa's already improving fiscal outlook.