Johannesburg – The South African Reserve Bank governor Lesetja Kganyago will announce the Monetary Policy Committee’s (MPC) latest decision on interest rates in the country on Thursday.
The MPC raised the repurchase November rate by 25 basis points to 3.75% when they last met in November last year.
This means the current prime interest rate in South Africa is at 7.25%.
Economists have predicted that the governor will be increasing the lending rate again this year.
This is attributed to some downside risks to growth that have materialised.
“This could limit the spike in the bank’s quarterly projection model implied path for the repo rate.We continue to expect a cumulative 125bp of rate hikes in 2022, which is more than the Reuters analyst consensus, but much less than the 220bp of hikes priced in by the market,” said Jeff Schultz – Senior Economist at BNP Paribas South Africa.
Schultz further said that forecasts show further hikes of 25 bps in every quarter from now until the second quarter of next year to 5.25%.
“The central bank is then expected to pause for the rest of 2023,” Shultz further stated.
According to Shultz, he said that the panel is confident that the repo rate will increase this year by 50% believing the repo rate will increase four times in 2022, 30% three times, 15% twice, and 5% once.
In the previous meeting, Kganyago warned that repo rate increases should be expected in 2022 and 2023.
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