We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

As expected, SA Reserve Bank (Sarb) governor Lesetja Kganyago and his team at the Monetary Policy Committee (MPC) delivered a 75 basis point (bps) increase in the repo rate last week, taking the rate to 5.5% and prime lending rate to 9%. This is largely in line with where the repo rate was before the start of the coronavirus pandemic, however, SA’s inflation rate is significantly higher than it was two years ago at 7.4% and thus it seems unlikely that this rate increase, as steep as it is, will be the last.

According to the governor, three members of the MPC voted for a 75 bps rise, one member voted for a 100 bps rise and one member voted for a 50 bps. Given that SA’s inflation is caused mainly by imported factors — fuel and food prices mainly — and not excessive demand, it is difficult to see the rationale for believing that raising interest rates will have the desired effect of choking off inflation. ..

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as articles from our international business news partners; ProfileData financial data; and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.

Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.

Commenting is subject to our house rules.