Reserve Bank raises repo rate to 4%, as expected

As widely expected, South African Reserve Bank governor Lesetja Kganyago announced a 25 basis points increase in the repo rate on Thursday, taking the key rate that it lends to commercial banks to 4%. This means that the prime lending rate of commercial banks will increase to 7.5%. The decision follows the conclusion of the Sarb’s first Monetary Policy Committee meeting of 2022 and comes on the back of spiking inflation both locally and internationally.

Treasury forecasts 2021 GDP growth of 5.1% “This year and next, economic growth will remain well above a low rate of potential growth. GDP is expected to grow by 1.7% in 2022. The deceleration in growth from 2021 to 2022 is primarily a result of the fading rebound from the pandemic, alongside a climbdown from high export prices. GDP growth is forecast to be 1.8% in 2023 and 2.0% in 2024,” he added. Kganyago said headline inflation in 2021 came out at 4.

for this year revised higher to 4.9% . “Over the past year and into this year, global supply shortages and strong demand have caused a wide range of prices to accelerate, including raw materials, intermediate inputs and food. “Some of these price increases have passed-through to consumer prices in major economies…” “Oil prices are revised up for this year, and fuel price inflation is higher at 13.7% [up from 4.6%]. Local electricity price inflation for 2021 was 10.

SAReserveBank KganyagoLesetja Kwaze kwanyiwa.

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