The South African Reserve Bank (SARB) Governor Lesetja Kganyago says the sharper than expected 75 basis point rate hike is meant to rein in resurgent inflation.
Stats SA on Wednesday announced that consumer inflation had jumped to 7.4% – substantially above the bank’s target of 3% to 6%.
The Monetary Policy Committee (MPC)’s decision is the steepest hike since September 2002.
It puts South Africa’s repo rate at 5.5% and the prime rate at 9%.
Kganyago says the increase is necessary to protect the incomes of South Africans.
“You can rest assured that the South African Reserve Bank is determined to act on the rise in inflation. We also hear the cries of South Africans about the rising prices. We hear the cries of South Africans, that inflation is eroding their income,” says Kganyago.
“We are determined as the South African Reserve Bank, to protect the income of South Africans. The steps that we have taken so far to act against rising inflation, demonstrates our determination,” explains Kganyago.
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