South African Reserve Bank (SARB) Governor Lesetja Kganyago announced a 25 basis-point hike in the repo rate on Thursday, bringing the benchmark rate at which it lends to commercial banks to 4%.
This means that commercial banks’ prime lending rate will rise to 7.5 percent.
The decision at SARB’s first Monetary Policy Committee (MPC) meeting in 2022 was made in response to rising inflation domestically and globally.
Four members of the MPC voted in favour of a 25-basis-point hike, while one voted to keep the rate unchanged, according to Kganyago.
SARB now anticipates that the country’s GDP growth rate for 2021 will be 4.8 percent, down from the 5.2 percent forecast at the last MPC meeting in November, according to Kganyago.
Institute of Race Relations chief executive John Endres was quoted in Independent newspapers yesterday as pointing out that interest rate hikes were a double-edged sword – good for savers and pensioners who relied on savings (and earned more interest when rates were higher), but a difficulty for borrowers, as they had to pay more on their credit.
Endres noted, however, that the ‘rise in oil, petrol and electricity prices is determined less by interest rates and more by other factors, such as global energy prices and Eskom’s attempts to cover its costs and pay its debt’.
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