Reserve Bank hikes repo rate by 75 basis points to 5.5%

Governor Lesetja Kganyago made the announcement on Thursday afternoon.

FILE: Reserve Bank Governor Lesetja Kganyago. Picture: GCIS.

JOHANNESBURG - The South African Reserve Bank has increased the repo rate by 75 basis points to 5.5% per year, with effect from Friday.

Governor Lesetja Kganyago made the announcement on Thursday afternoon following the monetary policy committee's meeting.

He said the economy was yet to recover from the COVID-19 pandemic.

"Despite this outcome, flooding in KwaZulu-Natal and more extensive load-shedding are expected to result in a contraction of 1.1% in the second quarter. Growth in the third and fourth quarters is forecast to be 0.7% and 0.4%, respectively."

Kganyago said the economy was expected to expand by 1.3% in 2023 and by 1.5% in 2024, which was below the previous projection of 1.9% for both years at the time of the last meeting.

The bank’s forecast of headline inflation for this year has been revised higher to 6.5%.

This comes after Stats SA recorded the annual consumer price inflation at 7.4% for June - the highest in 13 years.

WATCH: Repo rate announcement