SA Reserve Bank hikes repo rate

THE SOUTH African Reserve Bank’s (Sarb) Monetary Policy Committee (MPC) has increased the repo rate by 25 basis points to 6% per annum.

The prime lending rate, the interest charged by banks to customers, will jump to 9.5 percent.

Briefing media following a three-day MPC meeting in Pretoria, on Thursday, Reserve Bank Governor Lesetja Kganyago said four members of the MPC voted for the increase, while two voted for it to remain the same.

“Although inflation is currently within the target range, the focus of monetary policy continues to be on the medium-term trend, to ensure inflation remains comfortably within the target range,” he said.

Kganyago said future rate rises would be data dependent.

The MPC noted concern over the inflation outlook towards the end of 2015 and into 2016, and a weak rand.

The repo rate was last raised by 25 basis points in July 2014 and has remained the same since then.

Many economists expected interest rates to rise, as they forecast inflation to be at the upper end of the 3% to 6% target band by the end of the year and into 2016.