The South African Reserve Bank’s Monetary Policy Committee (MPC) has once again increased the repo rate by 50 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 4.7% per year. The increase is effective from 20 May 2022.

Addressing the media on Thursday, the Governor 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 consecutive increment following a two 25 basis points hike in November and in January. At that time, the rise was the first in almost three years following a series of repo rate cuts amid the COVID-19 pandemic.  

The bank’s forecast of headline inflation for this year is revised higher to 5.9% (from 5.8%).

The Governor said this was primarily due to the 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 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.” 

Source: South African Government News Agency