SA Reserve Bank implements 10th straight interest rate hike

Lesetja Kganyago

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to increase interest rates by 50 basis points at its meeting today, which brings the repo rate to 8.25%.

This increase marks the 10th consecutive interest rate increase in the current hiking cycle, which started in November 2021. With today’s increase, the SARB has implemented a cumulative 475 basis points of hikes.

“Headline inflation is forecast to remain above the upper end of the inflation target range until the third quarter of this year, and will only sustainably revert to the mid-point of the target range by the second quarter of 2025,” said SARB Governor Lesetja Kganyago, as reasoning for the 50 basis point hike.

Kganyago also mentioned the impact of load-shedding on the MPC’s decision.

“Load-shedding may additionally have broader price effects on the cost of doing business and the cost of living, in particular as diesel consumption increases.”

This latest interest rate increase brings the country’s prime lending rate to 11.75% – the highest it has been since 2009.

The Reserve Bank has been attempting to bring inflation down and within its target range since the hiking cycle started but has been largely unsuccessful.

However, there is some hope on the horizon as this increase comes in light of April’s inflation data, which was released yesterday. Annual consumer price inflation was 6.8% in April 2023, down from 7.1% in March 2023. 

While not within the SARB’s target range, April inflation is the lowest the country has seen since May 2022 and the first time the rate has decreased month-on-month since January 2023. 

However, food and core inflation remains high and sticky, which was likely a significant contributing factor to the SARB’s decision today.


The increase is in line with most market expectations. Many experts predicted a 25 to 50 basis point hike for this meeting and were unanimous that a hike will be implemented.

Along with inflation, the strength of the rand was an important factor to consider at this month’s meeting, as the currency recently saw a significant drop.

The rand has been trading above R19 to the dollar since the US ambassador accused South Africa of supplying arms to Russia to aid in its war with Ukraine.

According to Kganyago, “Given upside inflation risks, larger domestic and external financing needs, and load-shedding, further currency weakness appears likely.”

Experts are mixed on whether this will be the last interest rate hike in the cycle or whether there is more pain in store.


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