Economist expects SARB to raise interest rates by 25 basis points
An economist says the South African Reserve Bank is likely to increase the repo rate by 25 basis points after inflation climbed to 5% in June, with higher oil prices adding to inflation risks.
An economist says he expects the South African Reserve Bank to increase the repo rate on Thursday afternoon.
It comes after consumer inflation jumped to 5% in June - the highest in two years.
The policy rate currently stands at 7%, while the prime lending rate is 10.5%.
"They'll be looking closely at the data to get an idea of other prices that are increasing because of the fuel price shock. Now, there are some worrying bits of data in there,” says Professor of Economics at North West University, Waldo Krugell.
"The core inflation rate increased, the services inflation rate increased, and I think considering that they are on the conservative side, they are probably going to increase the repo by 25 basis points."
He says the renewed hostilities in the Middle East will also have an impact.
"It's not the only influence on the oil price, but if the conflict continues, they are likely to expect a higher oil price going forward, and that means higher inflation in South Africa, and they need to act. The PDPs, those things need to be removed. Those vehicles need to be impounded. Those licences need to be removed."
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