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BL Premium reports that following a three-day meeting and as predicted by economists, the SA Reserve Bank’s (SARB’s) monetary policy committee (MPC) on Thursday lifted the repo rate by 50 basis points.
This was the biggest increase in the rate in more than six years, confirming the Bank’s hawkish stance on inflation as spiralling fuel and food costs pushed price increases closer to the upper end of its target range. The five members of the MPC voted 4-1 for the move, which takes the repo rate to 4.75% – its highest level since March 2020, just as the Covid-19 pandemic struck SA. Bank governor Lesetja Kganyago said the the MPC’s decision was to preserve credibility and avoid a de-anchoring of inflation expectations. After substantially reducing the repo rate from 6.25% to 3.50% during the early months of the pandemic to support the flailing economy, the SARB started hiking the repo rate in November 2021. The Bank revised its headline consumer inflation forecast slightly to 5.9% for 2022 (from 5.8%). Inflation for 2023 and 2024 is expected to average 5% and 4.7%, respectively. The MPC said it expected the economy to grow by 1.7% in 2022, compared with 2% at its March meeting. Kganyago said this drop was partly due to the floods that ravaged KwaZulu-Natal recently and electricity supply constraints.
- Read the full original of the report in the above regard by Thuletho Zwane at BusinessLive (subscriber access only)
- See too, Interest rates increased by biggest margin since 2016, at Engineering News
Get other news reports at the SA Labour News home page