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HomeEconomySouth African repo rate up 75bps, now near pre-pandemic levels

South African repo rate up 75bps, now near pre-pandemic levels

JOHANNESBURG (Reuters) – South Africa’s central bank raised its key lending rate by 100 basis points to 6 basis points. 25% to control inflation and bring it closer to pre-COVID levels.

The move was in line with expectations of most economists polled by Reuters and saw

the South African Reserve Bank (SARB) now raise interest rates for the sixth time in a row . These gains have collectively added 25 basis points (bps) since the tightening of policy 2021 in November.

The five-member Monetary Policy Committee (MPC) was split 3-2 in its decision, with three members leaning toward 75 Basis points increase and two other members want 100 bps rate hikes.

“The repo rate level is now closer to the prevailing level before the start of the pandemic,” SARB Governor Lesetja Kganyago told a news conference.

“The revised repo rate path remains supportive of credit demand in the near term, while raising rates to levels more consistent with current inflation risk views.”

Data on Wednesday showed that consumer inflation fell to 7.6 percent in August from a year earlier, from 7.8 percent in July, as fuel prices fell, but analysts said at the time they did not believe that would prevent banks from raising interest rates further.

The SARB’s target inflation rate is between 3% and 6%.

Consumer inflation is projected to average 6.5% in and 5.3% in 2023, while Previously it was 6.5% and 5.7%.

The economy is now forecast to grow 1.9% this year and 1.4% next year, similar to the 2.0% and 1.3% forecasts at the last MPC meeting in July.



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