The South African Reserve Bank’s Monetary Policy Committee (MPC) has once again increased the repo rate by 25 basis points.
The move, announced by SARB Governor Lesetja Kganyago on Thursday following an MPC meeting on Wednesday, will see the repo rate increase to 4% per year. The increase is effective from 28 January 2022.
This was the second consecutive increment following a 25 basis points hike in November 2021. Then, the rise was the first in almost three years following a series of repo rate cuts amid the COVID-19 pandemic.
Addressing the media following the MPC’s meeting, the Governor said in the near term, headline inflation had increased well above the mid-point of the inflation target band, and returns close to the mid-point in the fourth quarter of 2022.
Four members of the Committee preferred an increase and one member preferred an unchanged stance.
He 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. He said this year and next, economic growth would remain well above a low rate of potential growth.
“GDP is expected to grow by 1.7% in 2022. The deceleration in growth from 2021 to 2022 is primarily a result of the fading rebound from the pandemic, alongside a climb-down from high export prices. GDP growth is forecast to be 1.8% in 2023 and 2.0% in 2024.”