Johannesburg – The South African Reserve Bank (SARB) on Thursday raised the repurchase rate by 50 basis points.
Announcing the rate hike, Governor of the SARB Lesetja Kganyago said: “As we approach the mid-point of the year, persistent inflation and elevated financial stability risks continue to mark a somewhat improved global growth outlook.
“South Africa’s economic conditions, however, remain poor”.
He said growth prospects in Asia and Europe, while improved, remain negatively affected by Russia’s war in Ukraine and heightened geo-political tensions.
Among other reasons taken into account for the hike, was that domestic food price inflation continues to be elevated, and the risk of drier weather conditions in coming months has increased.
The SARB Governor warned load-shedding may additionally have broader price effects on the cost of doing business and the cost of living,
Kganyago said, against this background, “the MPC decided to increase the repurchase rate by 50 basis points to 8.25% per year, with effect from the 26th of May 2023”.
He said the decision to raise the repurchase rate was “unanimous”.
“The policy stance aims to anchor inflation expectations more firmly around the mid-point of the target band and to increase confidence of attaining the inflation target sustainably over time,” said Kganyago.
“Guiding inflation back towards the mid-point of the target band can reduce the economic costs of high inflation and achieve lower interest rates in the future.”