The South African Reserve Bank (Sarb) ratcheted the repo rate by 75 basis points on Thursday to 7%, as widely expected.
This is the second consecutive hike by such a margin and the seventh hike in a row this year, as part of hawkish moves by the bank’s Monetary Policy Committee (MPC) to bring spiking inflation under control.
The decision, announced by Sarb governor Lesetja Kganyago following the last MPC meeting for 2022, takes SA’s prime lending rate to 10.5%.
This is well into pre-pandemic levels, with the Sarb having no option but to announce another sharp repo rate hike after headline inflation for October surprised on the upside at 7.6%.
SA’s CPI rises to 7.6%
Even before the October consumer price index (CPI) was published on Wednesday, most economists and market commentators locally were forecasting a 75bps hike. This after two members of the Sarb’s MPC wanted a 100bps hike at the bank’s last meeting in September, together with higher petrol and diesel prices fueling inflation.