MPC hikes policy rate by 25 basis points to 7.25%
Reserve Bank Governor Lesetja Kganyago says the global shocks are hurting the economy.
The South African Reserve Bank has increased the policy rate by 25 basis points to 7.25% in response to growing global disruptions and inflation concerns. Governor Lesetja Kganyago cited geopolitical tensions and a recent rise in fuel prices as contributing factors that could push domestic inflation above the 3% target. The global shocks have led the bank to project medium-term growth of around 2%, with risks favoring the downside.
The local economy contracted by 0.2% in the second quarter, and the central bank has raised its near-term inflation forecasts. Kganyago expects headline inflation to exceed 5% later this year and early next year, before it declines as the fuel shock eases, targeting around 3% by the end of 2027. CPI Stats SA data showed annual consumer inflation rose to 4.4% in August from 4.3% in July. Analysts predict fuel prices will continue to rise in October, posing challenges for motorists.
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