Increased inflation blamed for repo rate increase

Reserve Bank Governor Lesetja Kganyago announced the MPC's decision on Thursday afternoon.

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

JOHANNESBURG - Increased inflation, driven by rising fuel and electricity prices, has been listed as the main reason for an increased repo rate.

The rate has been increased by 25 basis points to 4%.

Reserve Bank Governor Lesetja Kganyago announced the MPC's decision on Thursday afternoon.

He said growth for this year was still on track: “GDP is expected to grow by 1.7% in 2022.”

Kganyago said while growth remained positive, despite the effects of the COVID-19 pandemic, inflation was now a problem due to high electricity and food prices.

“The risks to the inflation outlook are assessed to the upside. Global producer price and food price inflation continued to go higher in recent months and could do so again.”

But he said it should stabilise.

A number of countries around the world have moved to increase their rates as global inflation remains high.