The South African Reserve Bank’s Monetary Policy Committee (MPC) announced that the repo rate is increasing by 0.75 basis points to 7%.
SARB governor Lesetja Kganyago made the announcement following the MPC’s final meeting for the year.
The level of the repurchase rate is now above the level prevailing before the start of the pandemic.
The vote to hike rates by 75 basis points was not unanimous. Three MPC members voted for the given hike versus two who preferred a 50 basis point increase.
The latest rate hike marks the eighth hike in the current cycle, with the total adjustment being 350 basis points since the hike cycle started a year ago in November 2021.
Kganyago said that the hike comes amid high levels of inflation in South Africa and a volatile global economic outlook for the year ahead.
He said South Africa’s economic growth prospects look weak, mainly due to high levels of load shedding.
Considering these and other factors, the SARB’s forecast for global growth in 2023 is revised lower to 1.9% (from 2.0%), while South Africa is expected to grow by 1.8% (from 1.9%) this year.
The economy is forecast to expand by 1.1% in 2023 (from 1.4%) and by 1.4% in 2024 (from 1.7%), below previous projections. GDP growth of 1.5% is forecast for 2025.