EDITORIAL: Only time will tell if rate hike is steep enough
The Reserve Bank aims to spare SA more pain further down the road
It was a slightly grumpy governor Lesetja Kganyago who presented the monetary policy committee statement on Thursday afternoon, and who could blame him? The meeting must have been a tough one. And the big news wasn’t that the committee opted in the end to hike interest rates by 75 basis points, as widely expected. It was that two of the committee’s five members would have preferred a 100-basis-point hike.
That signals how concerned the Reserve Bank is about the outlook and the world in general, even if the latest inflation figures appear a little better than expected. With SA’s economy now expected to grow at just 1.9%, down from the Bank’s 2% forecast two months ago, such steep hikes must have been tough to contemplate, whether 100 or 75. And they would not normally be easy to justify given that the Bank has not changed its inflation forecast for 2022, which is still at 6.5%, and has cut 2023’s forecast from 5.7% to 5.3%, with food and fuel price inflation expected to come d...
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