South African Reserve Bank Raises Repo Rate To 7.25 Percent

The South African Reserve Bank (SARB) has raised the repo rate by 25 basis points to 7.25 percent, as the Monetary Policy Committee responds to a more uncertain global economic environment.

The committee said geopolitical tensions have intensified since its previous meeting, adding to inflation risks and complicating the outlook for global prices and interest rates.

According to the SARB, the conflict in the Middle East has escalated in recent months, while the Russia-Ukraine war continues to disrupt refinery capacity.

Global Conflicts Add To Supply Pressures

The central bank said the combined impact of these conflicts is contributing to a large and persistent global supply shock.

The developments have renewed concerns over fuel prices after an earlier indication that the shock might be easing. The SARB said the latest pressures are instead intensifying, increasing risks to the inflation outlook.

The central bank also noted that global interest rates are moving higher, adding another layer of uncertainty to the domestic monetary policy environment.

SARB Maintains Focus On Price Stability

SARB governor Lesetja Kganyago said the central bank had adopted a measured approach to interest-rate decisions while assessing the uncertain global conditions.

“A few months back, it seemed that the fuel-price shock might be unwinding, but now it has intensified. We are also seeing global rates moving higher.

YOU MAY ALSO LIKE: Hollard Denies It Was Hacked As Cyber Breach Hits Data Linked To 45 SA Insurers

"We have taken a measured approach to rate setting, in conditions of high uncertainty, but we remain focused on our price-stability mandate,” said Kganyago.

The 25-basis-point increase takes the repo rate to 7.25 percent. The SARB said its response reflects the renewed inflation risks arising from the global supply shock and geopolitical developments.