With effect from Friday, the South African Reserve Bank increased the repo rate by 75 basis points to 5.5% per year.
Governor Lesetja Kganyago made the announcement following the monetary policy committee meeting on Thursday afternoon. He noted that the economy was still recovering from the COVID-19 pandemic.
“Despite this outcome, flooding in KwaZulu-Natal and more extensive load-shedding are expected to result in a contraction of 1.1% in the second quarter. Growth in the third and fourth quarters is forecast to be 0.7% and 0.4%, respectively.”
Kganyago predicted that the economy would grow by 1.3 percent in 2023 and 1.5 percent in 2024, which was lower than the previous projection of 1.9 percent for both years at the time of the last meeting.
The bank’s forecast of headline inflation for this year has been revised higher to 6.5%.
The Bank’s forecast of headline inflation for this year is revised higher to 6.5%. Higher food, fuel, and core inflation are expected to keep headline inflation elevated at 5.7% in 2023. Headline inflation of 4.7% is expected in 2024, unchanged since the May meeting. pic.twitter.com/y8Zlyk6h2o
— SA Reserve Bank (@SAReserveBank) July 21, 2022
This comes after Stats SA recorded the annual consumer price inflation at 7.4% for June – the highest in 13 years.
WATCH: Repo rate announcement