On March 30th, the South African Reserve Bank (SARB) hiked the repo rate by 50 basis points, increasing it from 7.25% to 7.70% [1]. The decision came as a surprise, as a majority of economists polled on South Africa’s repo rate had anticipated a smaller increase of 25 basis points, raising the rate to 7.50% [1].
The repo rate is the interest rate at which the central bank lends money to commercial banks, which in turn impacts the prime lending rate and borrowing costs for consumers and businesses. The South African Reserve Bank’s (SARB) main objective is to keep inflation within a target range of 3% to 6% [5].
The SARB’s Monetary Policy Committee (MPC) is responsible for conducting monetary policy within a flexible inflation-targeting framework. The MPC consists of up to seven members from the SARB, including the Governor, three deputy governors, and selected senior officials appointed by the Governor [2]. The current Governor, Lesetja Kganyago, chairs the MPC meetings.
While there isn’t a direct quote from Governor Lesetja Kganyago explaining the March 30th MPC decision in the provided web search results, the central bank has been actively raising the repo rate in response to inflationary pressures. Inflation has been a concern in South Africa, with predictions that it will average 5.7% this year [5]. The 50 basis points increase in the repo rate could be an attempt to curb inflation and stabilize the economy.
For more specific information on the Governor’s explanation of the March MPC decision, you may want to search for a press release, a statement from the SARB, or look for interviews where Lesetja Kganyago discussed the decision.