Repo rate changed for first time since 2020
The repo rate has been increased by 25 basis points.
It goes up to 3.75% after it remained at 3.5 % for more than a year.
Reserve Bank Governor Lesetja Kganyago announced the decision of the Monetary Policy Committee on Thursday afternoon following their meeting.
He believes the rate hike is justifiable.
"Given the expected trajectory for headline inflation and upside risks, the committee believes a gradual rise in the repo rate will be sufficient to keep inflation expectations well anchored and moderate the future path of interest rates.
"Economic and financial conditions are expected to remain more volatile for the foreseeable future. In this uncertain environment, policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook."
The governor says quarterly projections are looking better than expected.
"For the fourth quarter, we expect a GDP outcome of 2.6%, compared to the previous 1.6%.
"Despite these quarterly revisions, the annual growth rate in GDP for 2021 reflects a healthy bounceback from the economic effects of the pandemic."
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