JOHANNESBURG — The South African Reserve Bank raised the repo rate by 75 basis points to 6.25% on a Thursday in a move that has received mixed reactions.
The increase was widely predicted by economists, as South Africa is among many countries where inflation has increased.
Reserve Bank Governor Lesetja Kganyago announced the new interest rate on Thursday further adding that inflation is still a major concern.
The annual inflation rate for South Africa fell to 7.6% in July from 7.8% in August this year.
Kganyago said inflation was not under control despite falling slightly to 7.6% in August.
“Other inflation expectations have risen to 6.5% for 2022.”
He said there were mixed opinions within the Monetary Policy Committee.
“Three committee members preferred the announced increase, two members preferred a 100 basis point increase.”
The governor said food prices are still an issue.
“Despite the decline in global food price inflation, local food price inflation has been revised upwards and is now expected to be 8.1% for 2022.”
The US Federal Reserve set the tone for today’s figure, raising its interest rate by 75 basis points.
However, the move by Kganyago to combat inflation by raising the repo rate has received a backlash from the Economic Freedom Fighters (EFF) party on Thursday.
EFF described the measures as “senseless, cruel and irrational” in a statement.
“The South African Reserve Bank’s obsession with outdated and redundant monetary policy in the face of overwhelming evidence of absolute failure,” the EFF said.
“The current monetary policy will only lead to more misery for many of the working-class households that are highly indebted, will lose their homes and cars, and are struggling to afford food and other essentials.”