The South African Reserve Bank (SARB) has increased its repo rate by 25 basis points to four percent for the first time in nearly three years with effect from Friday, SARB governor Lesetja Kganyago has announced.
This first quarter increment follows a meeting of the bank’s Monetary Policy Committee (MPC) on Wednesday which saw the second consecutive increase following a 25 basis points hike in November 2021, the governor said.
The rise is the first in almost three years following a series of repo rate cuts amid the Covid-19 pandemic which has devastated the country’s economy, he added.
While four members of the committee preferred an increase of the repo rate, one member preferred an unchanged stance, the governor said.
“Some risks to the inflation outlook, like food and fuel, have been realised, and other risks, such as currency volatility and capital flow reversals, have become more pronounced.”
The SARB chief said South Africa’s Gross Domestic Product (GDP) is expected to grow by 1.7 percent in 2022.
“GDP growth is forecast to be 1.8 percent in 2023 and 2.0 percent in 2024,” the top banker said.
NM/jn/APA