As a result of 'extensive load shedding and other logistical constraints', the SA Reserve Bank has revised its forecast for GDP growth to only 0.3%, the bank's Lesetja Kganyago said.
The interest rate hike of 25 basis points this week, taking the repo rate to 7.25% and the prime interest rate to 10.75%, is the eighth consecutive increase in the current upward rates cycle. It was, however, somewhat lower than widely held expectations of a 50 or even 75 basis points increase.
The South African Reserve Bank began with bigger rate hikes fairly early in the current cycle, effectively front-loading the tightening, and it is now in a position to taper as global and local inflationary pressures begin to fade.
Three members of the Monetary Policy Committee (MPC) preferred the 25 basis points increase, and two voted for 50 basis points.
Read more in Daily Maverick: "SA Reserve Bank announces eighth consecutive interest rate hike -- of 25 basis points"
Frank Blackmore, lead economist at KPMG, said the increase made sense.
"We are already at high levels of interest rates. They could have been punitive with an increase of 50 basis points, but by choosing smaller increments, it buys the...
