The Monetary Policy Committee (MPC) of the South African Reserve Bank has raised the repo rate by 50 basis points yet again.
Following a meeting of the SARB's Monetary Policy Committee on Wednesday, SARB Governor Lesetja Kganyago announced an increase in the repo rate to 4.7 percent per year on Thursday. The increase goes into effect on May 20, 2022.
Kganyago said four members of the MPC preferred the announced increase and one member preferred a 25 basis point rise in the repo rate.
This was the third increase in a row, following two 25-basis-point increases in November and January. The increase was the first in nearly three years, following a series of repo rate cuts in the aftermath of the COVID-19 pandemic.
The bank's forecast for headline inflation this year has been raised to 5.9 percent from 5.8 percent.
According to the Governor, this is primarily due to 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. Headline inflation of 4.7% is now expected in 2024,” he said.
He further said: “The economy is expected to grow by 1.7% in 2022, revised down from 2.0% at the time of the March meeting. This is due to a combination of short-term factors, including the flooding in Kwa-Zulu Natal and the continued electricity supply constraints.”
