This brings the prime rate to 9.5%.
Governor Lesetja Kganyago told a press conference in Pretoria today that the Monetary Policy Committee (MPC) had indicated for some time that “it is in a hiking cycle in response to rising inflation risks, and a normalisation of the policy rate over time.”
“The MPC is cognisant of the fact that domestic inflation is not driven by demand factors, and the outlook for household consumption expenditure remains subdued.”
Kganyago noted that economic growth remains subdued, constrained by electricity supply disruptions and low business and consumer
confidence and the risks to the outlook remain on the downside.
“However, as emphasised previously, we have to be mindful of the risk of second-round effects on inflation, and the committee is concerned that failure to act against these heightened pressures and risks will cause inflation expectations to become entrenched at higher levels.
“The MPC has therefore decided to continue on its path of gradual policy normalisation.”
Kganyago added that four members of the MPC had favoured a 25 basis point increase, while two members had wanted an unchanged stance.