South Africa Hikes Benchmark Repo Rate to 7%
Amidst rising consumer price index, the South African Reserve Bank raised its benchmark repo rate by another 75 basis points to 7% at its November 2022 meeting, as widely expected.
This is the 7th consecutive rate hike since policy normalization started in November 2021, to anchor inflation expectations more firmly around the mid-point of the target band and achieve the inflation target in 2024.
South Africa’s inflation rate unexpectedly rose to 7.6% in October from 7.5% in September, staying above the upper limit of the central bank’s target range of between 3% and 6% for the sixth straight month.
The headline inflation forecast for the country was revised up to 6.7% in 2022 as against 6.5% in September and to 5.4% in 2023 from 5.3%. However, CPI is estimated to decline to 4.5% in 2024 from the previous estimate of 4.6%.
South Africa’s core inflation estimates were left unchanged for this year at 4.3% but revised higher to 5.5% in 2023 from 5.4%. The country’s GDP growth projections were cut to 1.8% in 2022.
Interest Rate in South Africa averaged 11.96 percent from 1998 until 2022, reaching an all-time high of 23.99 percent in June of 1998 and a record low of 3.50 percent in July of 2020. READ: Dealers Infractions: CBN Tightens Access to Discount Window
Meanwhile, the interest rate in South Africa is expected to be 7.00 percent by the end of this quarter, according to Trading Economics’ global macro models and analysts expectations.
In the long term, the South Africa Interest Rate is projected to trend around 7.50 percent in 2023 and 6.50 percent in 2024, according to our econometric models. #South Africa Hikes Benchmark Repo Rate to 7%
