Reserve Bank increases repo rate by 25 basis points

The Reserve Bank’s Monetary Policy Committee has decided to increase rates by 25 basis points for the third successive time since November last year. This takes the repo rate to 4.25% and the banks’ prime lending rate to 7.75%.

The bank says the current repurchase rate reflects an accommodative policy stance that will keep financial conditions supportive of credit demand, as the economy continues to recover.

Reserve bank Governor Lesetja Kganyago says three members of the Committee preferred the announced increase and two members preferred a 50 basis point rise in the repo rate.

“Some risks to the inflation outlook, like food and fuel, have been realised, and other risks, such as currency volatility and capital flow reversals, have become more pronounced. Against this backdrop, the MPC decided to increase the repurchase rate by 25 basis points to 4.25% per year, with effect from the 25th of March 2022. Three members of the Committee preferred the announced increase and two members preferred a 50 basis point rise in the repo rate.”