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AuthorAuthor: Chris CammackUpdated: March 30, 2023

Last Updated On March 30, 2023

Chris Cammack

Today in a surprise move, the Monetary Policy Committee of the South African Reserve Bank (SARB) raised the repurchase rate to 7.75%, a 50-bps hike. Markets had priced in a 25 bps hike prior to the meeting of the MPC.

SARB governor Lesetja Kganyago cited stubbornly high inflation, coming in at 7% in February, as the reason for the larger-than-expected rise. “The revised repurchase [repo] rate is now less accommodative and is more consistent with the current view of risks to inflation. The aim of the policy is to anchor inflation expectations more firmly around the mid-point of the target band and to increase the confidence of attaining the inflation target sustainably over time,” the governor said.

The move takes the prime interest rate to 11.25%, the highest since 2009.

The ZAR strengthened considerably in the wake of the move, with the ZAR up to 17.75 against the USD before paring back some of its gains. The ZAR’s move was helped by a generally weaker dollar, following uncertainty over the US Federal Reserve’s strategy to combat inflation in the months ahead.

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