Kganyago: Weaker rand, escalating wage demands led to repo rate was increase

The Reserve Bank has increased the rate by 25 basis points to 3.75%.

FILE: South African Reserve Bank Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter

JOHANNESBURG - A combination of factors has left the Reserve Bank with little to choose but to increase the repo rate, saying there were risks of higher inflation.

The Reserve Bank has increased the rate by 25 basis points to 3.75%.

This is bad news for those who are struggling financially with high fuel and electricity prices seeing consumer shaking their heads when doing their budgets.

Reserve Bank Governor Lesetja Kganyago has noted that the cost of living is increasing faster than expected.

He said inflation needed to be curbed to keep it between 3% and 6%: “A weaker currency, higher domestic import tariffs and escalating wage demands present additional risks to the inflation.”

But on the upside, Kganyago said growth was still on track for the country to recover somewhat from the effects of the COVID-19 pandemic.

“Overall, we forecast the economy to grow by 5.2% this year.”

Consumers are already battling high fuel, food and electricity prices and the increased repo rate will be another below the belt to those trying to make ends meet.