Rampant inflation sees SARB hike repo rate by 75bps
The South African Reserve Bank increased the repo rate by 75 basis points on Thursday.
This puts the repo rate, at which the central banks loans money to commercial banks, at 5.5%.
The 75 basis point hike is the steepest in a decade and comes a day after South Africa reported a 13-year high in inflation.
Reserve Bank governor Lesetja Kganyago said the monetary policy committee remains concerned over high inflation and weak economic growth.
"The revised repurchase rate path remains supportive of credit demand in the near term while raising rates to levels consistent with the current view of inflation risks. The aim of the policy is to stabilise inflation expectations more firmly around the mid-point of the target band and to increase the confidence in hitting the inflation target in 2024.
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"Economic and financial conditions are expected to remain more volatile for the foreseeable future. In this uncertain environment, monetary policy decisions will continue to be data-dependent and sensitive to the balance of risks to the outlook.
"The MPC will seek to look through temporary price shocks and focus on potential second-round effects and the risks of de-anchoring inflation expectations. The bank will continue to closely monitor funding markets for stress," added Kyanyago.
The move was the fourth rate hike in a row.
