S.Africa hikes interest rate, inflation forecast
25 May 2023 11:17pm
South African monetary policymakers started raising rates in November 2021 and sprang their steepest hike in a decade -- 0.75 percentage points -- in July last year. - pic from central banking
The bank raised its benchmark rate by 0.5 percentage points to 8.25 percent, in what it said was a unanimous decision of its monetary policy committee.
It was the 10th consecutive hike by the South African Reserve Bank.
Governor Lesetja Kganyago said the policy aimed at increasing confidence that inflation could be reined in "sustainably over time".
South African monetary policymakers started raising rates in November 2021 and sprang their steepest hike in a decade -- 0.75 percentage points -- in July last year.
Inflation dropped to the lowest level in almost a year in April, slowing to 6.8 percent from 7.1 percent in March.
Yet, food prices remain obstinately high, having experienced record increases over the past 12 months.
On Thursday, the central bank said it expected inflation to average at 6.2 percent this year, up 0.2 percentage points on earlier forecasts.
"With core goods and food higher in the near term, headline inflation for 2023 is revised up," Kganyago said in a statement.
"Headline inflation for 2024 also increases to 5.1 percent," he added.
Policymakers around the world are battling elevated inflation caused largely by surging energy and food prices following Russia's invasion of Ukraine.
