Repo rate increases by 25 basis points to 4.25%


South African Reserve Bank Governor Lesetja Kganyago on Thursday afternoon announced that the repo rate has been increased by 25 basis points 4.25%

Kganyago made the announcement during the briefing on the monetary policy committee (MPC)’s decision in Pretoria, saying the increase comes into on March 25.

“Three members of the committee preferred the announced increase and two members preferred a 50 basis point rise in the repo rate,” he said.

He said inflation was high due to a number of factors, including high electricity prices: “The banks’ forecast of headline inflation for this year is revised higher to 5.8% primarily due to the higher food and fuel prices.”

The Governor also said Covid-19 pandemic came with a number of economic and diverse setbacks:  “Since January, the Omicron wave of the COVID-19 virus has transmitted globally with diverse social & economic outcomes. Despite the high infection rate, many economies remained open and, with some exceptions, the economic costs of the virus continue to fall.

“Even as the economic impact of the pandemic fades, the outbreak of war in February between Russia and Ukraine is expected to reduce global economic growth and contribute to higher inflation,” he added.

In January this, the Reserve Bank had hiked the rep rate by 25 basis points to 4%.

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