South Africa’s central bank has increased its repo rate by 50-basis points to reach 4.7% starting on Friday, bank governor Lesetja Kganyago has announced.
Kganyago said this was the third consecutive increment following 25-basis point hikes in January 2020 and November 2021.
At that time, the rise was the first in almost three years following a series of repo rate cuts amid the Covid-19 pandemic, he added.
In addition, the bank’s forecast of headline inflation for this year was revised slightly higher from 5.8% to 5.9%, the governor said, noting this was primarily due to the higher food and fuel prices.
“While food prices will stay high, fuel price inflation should ease in 2023 – helping headline inflation to fall to 5.0% despite slightly higher core inflation,” he said.
He added: “The economy is expected to grow by 1.7% in 2022, revised down from 2.0% at the time of the March meeting.”
The downward review of the growth rate was attributed to a combination of short-term factors, including the flooding in KwaZulu Natal province and the continued electricity supply constraints.
NM/jn/APA