South Africa's central bank to raise repo rate

  • World
  • Friday, 27 Jan 2023

JOHANNESBURG, Jan. 26 (Xinhua) -- The South African Reserve Bank (SARB), the country's central bank, on Thursday decided to raise the repurchase rate by 25 basis points to 7.25 percent, with effect from Jan. 27.

"The aim of the policy is to anchor inflation expectations more firmly around the mid-point of the target band and to increase the confidence of attaining the inflation target sustainably over time," SARB Governor Lesetja Kganyago said at a press briefing in Pretoria, the administrative capital of South Africa.

By using inflation targeting, the bank seeks to keep the country's consumer inflation between 3 percent and 6 percent.

"Guiding inflation back toward the mid-point of the target band can reduce the economic costs of high inflation and enable lower interest rates in the future," he said.

Load shedding, which is now a regular occurrence in South Africa, will have an effect on the growth of the country's gross domestic product in 2023, according to Kganyago.

"We forecast no growth in the fourth quarter of 2022. Given the scale of load shedding, the SARB estimates that it deducts as much as two percentage points from growth in 2023, compared to the previous estimate of 0.6 percentage points," he said.

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