Repo rate

The rate hike was announced by South African Reserve Bank (Sarb) Governor Lesetja Kganyago on Thursday, moving to front-load a steeper increase to rein in ...

While conceding that South Africans will feel “a pinch” in their bond repayments, store credit and vehicle finance she says “A bigger issue is the inflation-driven (rate is now at 7.4%) increase in the cost of living. The rise in inflation expectations is of particular concern to the MPC because it tends to be stickier than supply-driven inflation.” Our forecast for core inflation in 2024 is slightly higher at 4.9% (from 4.8%). #SARBMPCJULY pic.twitter.com/wHjJunR4QR “For example, in Canada, interest rates went from 0.25% in December 2021 to 2.5% in July 2022 – a ten-fold increase. This is also substantially above Canada’s pre-Covid rate of 1.75%. Economy forecast to expand by 1.3% in 2023 and by 1.5% in 2024 (Previously 1.9% for both years). “Consumers and borrowers should, however, be aware that further rate hikes by the central bank are a possibility in coming months. The Sarb’s monetary policy thus remains in line with longer-term trends if we look beyond the extreme measures taken during 2020. “The MPC has opted to further front-load interest rate hikes, which reveals the pressure on the local monetary policy authority to get ahead of elevated inflation and inflation expectations, avoid a significant narrowing of the interest rate differential between SA and key trading partners, while also confronting risks to growth. SA has not bucked the trend of upside inflation surprises, and this has broadly resulted in a lift in expected inflation. - Core inflation forecast higher, at 4.3% in 2022 (up from 3.9%), rising to 5.6% (from 5.1%) in 2023 and 4.9% in 2024 (from 4.8%). - Bank’s forecast of headline inflation for 2022 revised higher to 6.5%. Higher food, fuel, and core inflation expected to keep headline inflation elevated at 5.7% in 2023; 4.7% is expected in 2024 (unchanged since May meeting).

A three-quarter percentage point hike to 5.5% will mean the sharpest increase since 2002. With South Africa's headline consumer inflation coming in at 7.4% ...

This would be the sharpest hike in almost two decades. “[This is] especially when we expect the US to increase by 75bps for a second time [this month] and also given that our [SA] inflation is totally out of control,” he said. “In fitting with the Sarb’s consistent language that the QPM should be used as a ‘guide’ rather than a dogmatic policy tool, we believe that a majority on the MPC are likely to favour additional frontloading of 75bps as it looks to attempt to nip early signals of second-round inflation and expectations in the bud,” he adds. “The Sarb assumed steady 25bps incremental hikes from the US Fed… Clearly this will have to be adjusted based on the Fed’s 75bps June hike and strong likelihood of another 75bps this month,” says Schultz. Schultz says the Sarb’s estimates for CPI in 2022 (5.9%) and 2023 (5%) will need to be revised higher. While SA and several emerging markets started hiking repo rates earlier, the move by the US has rattled global markets and is fuelling forecasts of a US recession and possible global recession.

Reserve Bank Governor Lesetja Kganyago has announced that the repo rate is increasing by 75 basis points to 5.5 percent, meaning that the prime lending rate ...

Against this backdrop, the MPC decided to increase the repurchase rate by 75-basis points, to 5.5 percent per year, with effect from the 22nd of July 2022.” “In the second quarter of this year, headline inflation breached the target range and is expected to remain above it until the second quarter of 2023. However, he says he expects inflation to return to the midpoint of the inflation target of around three percent in South Africa by 2024.

In a split decision, the bank's monetary policy committee increased the repo rate, which affects the cost of borrowing, by 75 basis points.

Earlier on Thursday, the European Central Bank dived into its hiking cycle by raising its policy rate by 50 basis points, against earlier guidance that it would hike by a smaller 25 basis points. By frontloading hikes, the bank intends to avoid hiking by higher increments “which might actually even choke growth even further”. Oil prices increased strongly from the start of the war and may rise further as stresses in energy markets intensify,” the committee said. The economy will only miss the 2% growth target if it experiences another contraction later in the year, Kganyago explained. In the wake of the MPC’s previous decisions, the Reserve Bank has faced criticism for throwing cold water on South Africa’s already glacial economic growth. South Africa’s consumer inflation now stands at 7.4%, somewhat lower than in other countries, such as the United States, which last month saw inflation accelerate to its highest rate since 1981.

Reserve bank governor Lesetja Kganyago will announce the repo rate on Thursday.

However, curbing rising inflation is crucial to cushion salaries of consumers. In May, the central bank hiked the repo rate by 50 basis points, the biggest margin in more than five years, to 4.75%, as food and fuel prices pushed consumer prices to the upper-end of the target range. SA Reserve Bank increases repo rate by 75 basis points to 5.50%

The Reserve Bank has increased the repo rate by 75 basis points to 5.5% a year with effect from Friday, the biggest hike in borrowing costs.

“In the second quarter of this year, headline inflation breached the target range and is expected to remain above it until the second quarter of 2023. “Average surveyed expectations of future inflation have increased to 6% for 2022 and 5.6% for 2023. Miscellaneous goods and services increased by 4% year on year and contributed 0.6 of a percentage point. “Transport increased by 20% year on year and contributed 2.7 percentage points. The MPC will seek to look through temporary price shocks and focus on potential second-round effects and the risks of de-anchoring inflation expectations. By the fourth quarter of 2024, we expect headline inflation to revert to the mid-point of the target range on the back of declining fuel and food inflation.” Growth in the third and fourth quarters is forecast to be 0.7% and 0.4%, respectively. The [central] bank will continue to closely monitor funding markets for stress,” said Kganyago. In June, the annual inflation rate for goods was 11%, up from 9.5% in May. For services it was 3.9%, up from 3.6% in May,” shows the CPI report. Kganyago added that currency depreciation and other inflation risks such as the rising costs of food and fuel prices “have been realised, pushing unit labour costs and expectations of future inflation”. “The revised repurchase rate path remains supportive of credit demand in the near term while raising rates to levels consistent with the current view of inflation risks.” “In this uncertain environment, monetary policy decisions will continue to be data-dependent and sensitive to the balance of risks to the outlook.

The cost of living in South Africa just increased again as the Reserve Bank raised interest rates in the country.

Nominal wages are forecast to rise by 5.6% in 2022, 7.3% in 2023 and 5.7% in 2024,” Kganyago said. Headline inflation of 4.7% is expected in 2024, unchanged since the May meeting.— SA Reserve Bank (@SAReserveBank) pic.twitter.com/y8Zlyk6h2o July 21, 2022 Our forecast for core inflation in 2024 is slightly higher at 4.9% (from 4.8%). #SARBMPCJULY pic.twitter.com/wHjJunR4QR July 21, 2022 “ Russia’s war in Ukraine will continue to impair production and trade of a wide range of energy, food and other commodities. — SA Reserve Bank (@SAReserveBank)— SA Reserve Bank (@SAReserveBank) @KganyagoLesetja:Core inflation is forecast higher at 4.3% in 2022 (up from 3.9%), rising to 5.6% (from 5.1%) in 2023. The Bank’s forecast of headline inflation for this year is revised higher to 6.5%. Higher food, fuel, and core inflation are expected to keep headline inflation elevated at 5.7% in 2023. — SA Reserve Bank (@SAReserveBank)— SA Reserve Bank (@SAReserveBank) @KganyagoLesetjaA higher global oil price & rand weakness contribute to higher expected fuel price inflation for this year at 38.9% (up from 31.2%) & to 4.5% in 2023 (up from -0.3%). Local electricity price inflation is unchanged at 11.0% in 2022, 9.2% in 2023, and 10% in 2024. On the economy, the governor said, “The economy is forecast to expand by 1.3% in 2023 and by 1.5% in 2024, which is below the previous projection of 1.9% for both years at the time of the last meeting.” “Oil prices spiked to around US$130 per barrel in early days of the conflict in Ukraine. While oil prices currently sit at around US$106/ barrel, we expect them to stay higher than we did in May & to average US$108/barrel for 2022, US$92/barrel in 2023 & US$85/barrel in 2024,” Kganyago said. Statistics South Africa (StatsSA) yesterday said the annual inflation rate in South Africa quickened to 7.4 percent in June from 6.5 percent in May, rising above market expectations of 7.2 percent. The South African Reserve Bank’s MPC has decided to increase the repurchase rate by 75 basis points to 5.50% per year, with effect from the 22nd of July 2022.— SA Reserve Bank (@SAReserveBank) July 21, 2022 The cost of living in South Africa continues to go up after the South African Reserve Bank (Sarb) increased the lending rate on Thursday.

"In the wake of the Covid-19 pandemic and aggravated geopolitical tensions, the global economy has entered a period of persistently high inflation and weaker ...

"Russia's war in Ukraine will continue to impair production and trade of a wide range of energy, food and other commodities," Mr. Kganyago said. Rising energy and food prices have pushed up South Africa's consumer-price inflation in recent months. The rate quickened to a 13-year high of 7.4% in June from 6.5% in May, breaching the upper limit of the central bank's target range of between 3% and 6%. The bank's forecast of headline inflation for 2022 was revised up to 6.5% from 5.9%. "Higher than expected inflation has pushed major central banks to accelerate the normalization of policy rates, tightening global financial conditions and raising the risk profiles of economies needing foreign capital," Mr. Kganyago said. Three members of the committee preferred the announced increase, while one member preferred a 100 basis points increase, and another preferred a 50 basis point increase, Mr. Kganyago said. "In the wake of the Covid-19 pandemic and aggravated geopolitical tensions, the global economy has entered a period of persistently high inflation and weaker economic growth," he said.

By Aaisha Dadi Patel JOHANNESBURG--The South African Reserve Bank on Thursday raised its main repo rate by 75 basis points to 5.5% from 4.75%, the highest.

"Russia's war in Ukraine will continue to impair production and trade of a wide range of energy, food and other commodities," Mr. Kganyago said. Rising energy and food prices have pushed up South Africa's consumer-price inflation in recent months. The rate quickened to a 13-year high of 7.4% in June from 6.5% in May, breaching the upper limit of the central bank's target range of between 3% and 6%. The bank's forecast of headline inflation for 2022 was revised up to 6.5% from 5.9%. "Higher than expected inflation has pushed major central banks to accelerate the normalization of policy rates, tightening global financial conditions and raising the risk profiles of economies needing foreign capital," Mr. Kganyago said. Three members of the committee preferred the announced increase, while one member preferred a 100 basis points increase, and another preferred a 50 basis point increase, Mr. Kganyago said. "In the wake of the Covid-19 pandemic and aggravated geopolitical tensions, the global economy has entered a period of persistently high inflation and weaker economic growth," he said.

Bruce Whitfield interviews economist Goolam Ballim (Standard Bank) after the Reserve Bank announced a repo rate increase.

Read More Read More Read More Read More Read More Read More Read More Read More Read More (Read the full MPC statement here) Read More Read More

If you have a credit card or loan. you will have to fork out more in interest as the South African Reserve Bank raises the repo rate.

“The cost of doing business is going to go up due to the prime overdraft rate. “The consumers are already complaining about the high rise of cost of living. This interest rate means consumers will have less money to spend. But this is affecting everyone and not only those who are in debt.”Professor Bonke Dumisa He said the economy is yet to recover from the Covid-19 pandemic. Those in debt and or have taken out loans are now screwed by the increased repo rate.

The repo rate has been hiked by 75 basis points on Thursday. This brings the repo to 5.5% and the prime rate to 9%. Three members of the monetary policy ...

The rand has already started to weaken in response, breaching R17/$ for the first time since 2020. This is the biggest hike since September 2002, when the repo rate was hiked by 100 basis points amid an emerging market crisis. By hiking interest rates, the Reserve Bank wants to cool down inflation by suppressing demand in the economy. The monthly payment on that mortgage has now climbed by almost R3 000 since November last year. The US Federal Reserve looks set to hike its key rate by another 75 basis point rate next week, in an effort to subdue inflation. This will drive inflation even higher.

The repo rate has been increased by 75 basis points to 5.5%, with the prime lending rate now at 9%.

Chief economist at Stanlib Asset Management, Kevin Lings: "If they allow it to get out of hand it will become self-fulfilling. The repo rate has been increased by 75 basis points to 5.5%, with the prime lending rate now at 9%. The repo rate has been increased by 75 basis points to 5.5%, with the prime lending rate now at 9%.