SA Reserve Bank hikes repo rate again
The repo rate has been increased by 25 basis points to 4.25%.
Reserve Bank Governor Lesetja Kganyago says the Monetary Policy Committee was divided about how much they should increase the rate.
"In the near-term, headline inflation has increased well above the mid-point of the inflation target band and is forecast to breach the target range in the second quarter.
"Headline inflation then returns close to the mid-point in the second quarter of 2023, taking into account the policy rate trajectory indicated by the Bank’s Quarterly Projection Model.
"Some risks to the inflation outlook, like food and fuel, have been realised and other risks, such as currency volatility and capital flow reversals, have become more pronounced.
READ: Reserve Bank urged not to hike repo rate
Russia's invasion of Ukraine has sent oil prices surging.
Russia, which is the third-biggest producer of the commodity in the world, has been hit by sanctions for its actions, with some major governments, including the United States, also banning imports of energy resources from that country.
Kganyago says the average international price of oil is expected to remain above $100 a barrel this year.
"Oil prices spiked to around US$130 per barrel in the early days of the conflict before easing somewhat. We expect oil prices to average US$103 per barrel for 2022, US$80 per barrel in 2023 and US$75 per barrel in 2024,” says Kganyago.
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