Thu, 08 Jun 2023

South African Reserve Bank raises repo rate

26 May 2023, 03:05 GMT+10

JOHANNESBURG, May 25 (Xinhua) -- The South African Reserve Bank (SARB), the country's central bank, announced Thursday to increase the repurchase rate by 50 basis points to 8.25 percent, with effect from Friday.

"The policy stance aims to anchor inflation expectations more firmly around the mid-point of the target band and to increase confidence of attaining the inflation target sustainably over time," said SARB governor Lesetja Kganyago when presenting the decision of the central bank's monetary policy committee.

Data showed Wednesday that South Africa's annual consumer inflation slowed to 6.8 percent in April from 7.1 percent in March. The target band set by the SARB is from 3 percent to 6 percent.

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

Energy and logistical constraints remain binding on South Africa's growth outlook, limiting economic activity and increasing costs, Kganyago said, who estimated that power cuts alone would deduct 2 percentage points from the country's growth this year.

The SARB forecasted the South African economy to grow 0.3 percent in 2023, 1 percent in 2024 and 1.1 percent in 2025, respectively.

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