The SA Reserve Bank has increased the repo rate by 75 basis points to 6.25% effective from Friday, with prime now at 9.75% a year.
The central bank’s governor, Lesetja Kganyago, told the media on Thursday that three members of the bank’s monetary policy committee (MPC) pushed for a 75 basis points rise while two others wanted the repo rate to be increased by 100 basis points.
The increase is the fifth consecutive interest rate hike since November 2021. The repo rate was hiked by 50 basis points in May and a further 75 basis points in July.
According to Kganyago, the repurchase rate remains supportive of the credit demand in the next term while raising the rates to levels that are consistent with the current interpretation of the inflation risks.
He said the level of the repurchase rate is now closer to that which prevailed before the outbreak of the Covid-19 pandemic in 2020.
Kganyago added that economic and financial conditions are expected to remain unpredictable. “The aim of the policy is to anchor inflation expectations more firmly around the mid-point of the target band, and to increase the confidence of hitting the inflation target in 2024,” he said.
“In this uncertain environment, monetary policy decisions will continue to be data-dependent and sensitive to the balance of risks to the outlook. The MPC will look through temporary price shocks and focus on potential second-round effects and the risks of de-anchoring inflation expectations. The bank will continue to closely monitor funding markets for stress.”
https://twitter.com/SAReserveBank/status/1572939080845107200?s=20&t=mVilzpJO48GMJk1dQMZ_VQ
For more business news from Sunday World, click here.
Follow @SundayWorldZA on Twitter and @sundayworldza on Instagram, or like our Facebook Page, Sunday World, by clicking here for the latest breaking news in South Africa. To Subscribe to Sunday World, click here
