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The South African Reserve Bank’s Monetary Policy Committee agreed on an increase in the repurchase rate (Repo rate) by 75 basis points to 5.50% per year. It has become effective from the 22nd of July 2022. Three members of the Committee preferred the announced increase. While one member preferred a 100 basis points increase the third member preferred a 50- basis point increase.
The South African Reserve Bank’s Monetary Policy Committee agreed on an increase in the repurchase rate (Repo rate) by 75 basis points to 5.50% per year. It has become effective from the 22nd of July 2022. Three members of the Committee preferred the announced increase. While one member preferred a 100 basis points increase the third member preferred a 50- basis point increase.
The Central Bank sources said that the increase in the Repo rate was aimed at stabilizing inflation, which is at a record high as reported by www.trendsnafrica.com a few days ago. The Central Bank chief Kganyago considers the revised repurchase rate would be supportive of credit demand in the near term. He feels that raising rates to the present levels is consistent with the current state of inflation risks. The inflation expectancy of the economy is quite high on account of the onslaught triggered by the ongoing Russian-Ukraine war and fluctuating exchange rate of the Rand against the US dollar.
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The governor said that the southern African nation’s economy is expected to grow by 2.0%, revised up from 1.7%. South Africa recently faced many challenges. Apart from the double recession that started in 2009, the country was the most affected in Africa during the pandemic. Only recently, the country was declared free from the fifth wave of the Covid-19 pandemic. In addition, the economy has been under the spell of a reeling power crisis. The power plants in the country are constantly under repair mode leading to shut down leading to interrupted power supply adversely affecting industries and households alike.
