The South African Reserve Bank’s monetary policy committee (MPC) meets on Thursday for the first time in the new year to deliberate on interest rates.
At its last meeting of the year in November 2022, the MPC raised the benchmark repo rate by 75 basis points to 7%. The decision to hike the repo rate meant the prime lending rate increased to 10.50% in November from 9.75%.
The repo rate is the interest rate at which the Reserve Bank lends money to commercial banking groups. An increase in the repo rate influences the prime lending rate that commercial banks charge when they lend to their clients.
At the time, the Reserve Bank had to contend with runaway inflation for several months, with the October inflation print coming in at 7.6%, which was above the central bank’s target band of 3% to 6%.
Inflation in South Africa has breached the upper limit (6%) of the central bank’s target range for six consecutive months.
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