South Africans are set to feel more pain in the coming months as the South African Reserve Bank (SARB) today hiked the repo rate once again by 25 basis points, taking the repurchase rate (repo rate) to 7.25% from 7%.
This means that the prime lending rate in the country will increase from 10.5% to 10.75%.
Lesetja Kganyago, governor of the SARB, announced that the modifications would take effect on January 27, 2023.
Prior to the Monetary Policy Committee (MPC) meeting, a number of experts projected a rise of 25 to 50 basis points.
The graphic below shows how much your home loan repayment will increase per month:
Watch the governor make the announcement below:
Predicted
“As this year gets started, the world’s conditions are still being shaped by high inflation and lackluster economic development. Despite easing energy shortages, Russia’s war in Ukraine continues, and recession chances are high in the Euro Area. Kganyago said during his briefing.
The governor stated that because of load shedding and other reasons, the bank now forecasts the South African GDP to rise by just 0.3%.
Inflation forecast remains the same
“The Bank continues to predict 5.4% headline inflation for 2023 and a slightly higher 4.8% for 2024. We continue to anticipate 4.5% headline inflation in 2025. We expect core inflation to be slightly lower than expected in 2023 and 2024, at 5.2% and 4.7%, respectively. Kganyago said.
Food inflation may soon soar due to power cuts
The governor forewarned that consumers would experience higher food prices in 2023.
“The inflation of domestic food prices continues to surprise higher. According to him, load-shedding might increase both the cost of living and the cost of doing business.
“Achieving a prudent public debt level, increasing the supply of energy, moderating administered price inflation and keeping wage growth in line with productivity gains would enhance the effectiveness of monetary policy and its transmission to the broader economy. Economic and financial conditions are expected to remain more volatile for the foreseeable future. In this uncertain environment, monetary policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook,” said Kganyago.
