Categories: Africa Business

South Africa Central Bank Hikes Rate, Sees Weak GDP Growth

 

 

South Africa’s central bank raised its main interest rate again to battle inflation on Thursday, but at a slower pace as it forecast weak economic growth following rolling power blackouts.

Central banks worldwide have been raising rates to tame soaring consumer prices.

South African monetary policymakers started raising rates in November 2021 and unleashed their steepest hike in a decade — 0.75 percentage points — in July last year.

After two more 0.75-percentage-point increases, the central bank said Thursday it was lifting the rate by 0.25 percentage points.

The benchmark rate now stands at 7.25 percent.

The central bank said it expects inflation to slow to 5.4 percent in 2023, compared to 6.9 percent last year.

“The revised repurchase rate remains supportive of credit demand in the near term, while raising rates to levels more consistent with the current view of inflation and risks to it,” governor Lesetja Kganyago told a news conference in Pretoria.

The bank said that the economy is expected to grow by just 0.3 percent in 2023 due to the electricity supply crisis plaguing the continent’s most industrialised economy.

The economy grew 2.5 percent last year, up from 1.8 percent in 2021.

 

Nebianet Usaini

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