The Reserve Bank has increased the repurchase (repo) rate by 50 basis points to 6.75%‚ citing the deteriorating inflation outlook as the prime reason for the increase.
It said it was particularly concerned about rising inflation and the continued weakness of the rand.
Rising food prices had also been identified as an upside risk to the inflation outlook.
The weak rand has caused a deterioration in the inflation outlook and the Bank said it was concerned about this.
Since the previous meeting of the SARB’s Monetary Policy Committee‚ the rand had depreciated 13.5% against the US dollar‚ 15.2% against the euro‚ and12.9 % on a trade-weighted basis‚ the SARB said.
The central bank added that petrol prices had declined only marginally since November and current under-recovery in the fuel price suggested a possible increase of around 7c per litre in February.
International oil prices had declined to multi-year lows since the previous MPC meeting‚ it noted.
The SARB last raised rates by 25 basis points in November last year on rising inflation and despite forecasts for modest economic growth.
The increase in the repo rate means that the prime lending rate by banks will increase to 10.25%
Repo rate increased by 50bp to 6.75%
It said it was particularly concerned about rising inflation and the continued weakness of the rand.
Rising food prices had also been identified as an upside risk to the inflation outlook.
The weak rand has caused a deterioration in the inflation outlook and the Bank said it was concerned about this.
Since the previous meeting of the SARB’s Monetary Policy Committee‚ the rand had depreciated 13.5% against the US dollar‚ 15.2% against the euro‚ and12.9 % on a trade-weighted basis‚ the SARB said.
The central bank added that petrol prices had declined only marginally since November and current under-recovery in the fuel price suggested a possible increase of around 7c per litre in February.
International oil prices had declined to multi-year lows since the previous MPC meeting‚ it noted.
The SARB last raised rates by 25 basis points in November last year on rising inflation and despite forecasts for modest economic growth.
The increase in the repo rate means that the prime lending rate by banks will increase to 10.25%
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