Johannesburg- South African Reserve Bank governor, Lesetja Kganyago delivered the last decision for the year on the country’s interest rates.
The MPC, as was widely expected, has increased the repo rate by 25 basis points taking it to 3.75%.
In their last update in September, they kept it stable.
This means that the prime lending rate in South Africa will now be 7.25%.
In the last MPC meeting, Lesetja said the implied policy quarterly rate path projects an increase of 25 basis points in the fourth quarter of 2021 with increases expected in 2022 and 2023.
The country’s domestic economy grew by 4.2% in the first quarter of 2021 and 4.7% in the second quarter of 2021.
“We expect the GDP income to grow from last year’s 1.6% to 2.6% this year. Global inflation contributed to a weaker rand exchange rate to the US dollar,” Kanyago said.
The bank said the costs pressures have pushed producer inflation sharply in most countries, increasing the repo rate will be a wise decision.
“The move to increase the repo rate is not based on one factor but many factors, the risks have now elevated as compared to our previous meeting.”
In the previous meeting, Kganyago said the implied policy quarterly rate path projects an increase of 25 basis points in the fourth quarter of 2021 with increases expected in 2022 and 2023.
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