The Reserve Bank’s Monetary Policy Committee (MPC) has decided to increase rates by 25 basis points. This takes the repo rate to 4% and the prime lending rate to 7.5%.
Reserve Bank Governor Lesetja Kganyago says the risks to the inflation outlook are assessed to the upside.
He says global producer price and food price inflation continued to surprise higher in recent months and could do so again.
“The MPC decided to increase the repurchase rate by 25 basis points to 4% per year with effect from the 28th of January 2022. Four members preferred an increase and one member preferred an unchanged stance. Given the expected trajectory for headline inflation and upside risks, the committee believes a gradual rise in the repo rate will be sufficient to keep inflation expectations well anchored and moderate the future path of interest rates.”
Reserve Bank Governor Lesetja Kganyago announces MPC decision on repo rate:
Kganyago says they expect global economic growth to be slow as the rebound from the pandemic fades. He adds that economic growth has been affected due to a slower pace of vaccinations.
” South Africa’s economy rebounded strongly from the pandemic in 2021 but going forward the growth rate will, like global growth, slow and be subject to various risks. “