The South African Reserve Bank Monetary Policy Committee has increased the repo rate by 75 basis points to 7% per annum effective November 25, 2022.
The MPC meets every two months to assess the interest rate, having last met in September.
This is the sixth straight repo rate hike the country has seen since the beginning of the year.
The repo rate returned to pre-Covid levels in September this year after raising it by 75 basis points to 6.25%.
South African Reserve Bank Governor Lesetja Kganyago said three members of the Monetary Policy Committee prefer a 75 basis point hike, while two members prefer a 50 basis point hike.
He said that by raising the repo rate, the bank aimed to tame the inflation monster. Inflation rose to 7.6% on Thursday.
ALSO READ: Inflation Rises and Repo Rate Likely to Follow, Up 75 basis points
“Repurchase rate levels are now above levels seen before the pandemic began. The revised repurchase rate continues to support near-term credit demand and raise interest rates to levels more consistent with the current assessment of inflation and related risks,” Kganyago said.
Monetary policy normalization has accelerated and monetary conditions are likely to tighten further to ensure inflation eases from its currently high levels. With high long-term borrowing costs and expanded fiscal positions, there is less policy space for major counter-cyclical efforts to boost economic growth, Kganyago said.
The SARB forecast for global growth in 2023 has also been revised down to 1.9% from 2.0%. The International Monetary Fund’s October forecast for global growth is 3.2% in 2022 and 2.7% in 2023.