S.African reserve bank raises repo rate by 75 basis points to 7.00%

11/24/2022 | 08:47am

JOHANNESBURG (Reuters) -South Africa's central bank raised its main lending rate by 75 basis points to 7.00% in a decision announced on Thursday, aiming to tackle rising inflation.

The move was as expected by the majority of economists polled by Reuters.

The five-member Monetary Policy Committee (MPC) was split 3-2 in its decision, with three members preferring a 75 basis points (bps) increase and two wanting a 50 bps hike, central bank governor Lesetja Kganyago told a news conference.

"The aim of policy is to anchor inflation expectations more firmly around the mid-point of the target band and to increase confidence of attaining the inflation target sustainably over time," he said while delivering the MPC's decision.

"Guiding inflation back towards the mid-point of the target band can reduce the economic costs of high inflation and enable lower interest rates in the future."

The SARB has now raised rates for the seventh time in a row, adding a total of 350 bps to the repo rate since it began tightening policy in November 2021 to tame high inflation.

October consumer inflation in South Africa quickened to 7.6% year-on-year from 7.5% in September, after having slowed for two consecutive months, data showed on Thursday.

The central bank targets inflation between 3% and 6%.

On economic growth, the MPC revised its forecast to expand by 1.1% in 2023, from 1.4% previously, and by 1.4% in 2024, from 1.7%, also below previous projections.

GDP growth of 1.5% is forecast for 2025.

(Reporting by Bhargav Acharya, Rachel Savage and Kopano Gumbi; Additional reporting by Promit Mukherjee and Anait Miridzhanian;Editing by James Macharia Chege and Alex Richardson)

Reuters 2022
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