The South African currency, Rand, hit a new low on Thursday after the Reserve Bank increased the interest rate to a 14-year high, with the governor of the regulatory body saying the short-term pain was necessary.

The South African Reserve Bank (SARB) opted for a 50-basis point (bps) rate hike--a measure that helped the agency change the interest rate of any financial securities--to keep inflation under control.

Governor Lesetja Kganyago addressed the media following the hike in interest rate to 8.25% and explained that short-term pain was necessary to fix the economic condition of the country in the long run.

"Now, we have just reached the restrictive territory. We have got to see the effects of this policy stance and what it means," he said, News24 reported. "Given upside inflation risks, larger domestic and external financing needs, and load shedding, further currency weakness appears likely."

He added the "the economy is suffering from inflation."

"The medication might be bitter, but if the patient does not take the medication they will end up in surgery and in intensive care," he said, Reuters reported.

The co-chief investment officer at Anchor Capital, Nolan Wapenaar, explained that the country has moved into "restrictive interest rate territory with anaemic growth and inflation that is on a slow glide path back toward the mid of the band [4.5%]."

He went on to explain the hike "seemed less hawkish than the market was expecting, as we have not yet reached the end of the global hiking cycle."

SARB's official website issued a statement, mentioning how the Rand has weakened over the past year, with further sharp depreciation in recent weeks.

"The implied starting point for the rand forecast is R18.68 (23q2) to the US dollar, compared with R17.80 at the time of the previous meeting," it stated. "Currency markets are expected to remain volatile and sensitive to idiosyncratic shocks."

SARB noted that the rise in the inflation rate has been caused by fuel, electricity, and food prices.

"Our forecast for core inflation is revised up to 5.3% in 2023 (previously 5.1%), 5.0% (from 4.8%) and 4.6% (from 4.5%) in 2024 and 2025, respectively," it predicted.

Governor Kganyago admitted that this was an "uncertain environment" and "monetary policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook."

"The MPC will seek to look through temporary price shocks and focus on potential second-round effects and the risks of de-anchoring inflation expectations," he added. "The Bank will continue to closely monitor funding markets for stress."

Economists and experts predicted increased interest rates on Wednesday as the country was dealing with load-shedding and currency crises.

The energy company Eskom had announced last week the country could face Stage 8 of load-shedding. This year's winter was also reportedly going to be tough for South Africans as much as the summer, during which they were dealing with Stage 4 and Stage 5 load-shedding.

The ruling African National Congress's secretary general, Fikile Mbalula admitted that the country could "become a failed state" because of the electricity crisis.