After the unexpected increase in the inflation rate, consumers are worried that the repo rate increase will be very high. 💵 EconomyNews
Experts predict that struggling South Africans can expect a 25 basis point increase in the repo rate on Thursday when the Monetary Policy Committee of the South African Reserve Bank meets, but at least one economist expects an increase of at least 50 basis points. The Monitory Policy Committee of the Reserve Bank has to decide on the repo rate after South Africa's headline inflation rate increased to 7.
“However, this is set against a weakening trend for the rand exchange rate since the end-January MPC meeting, upward surprises in the January and February headline inflation, sticky 2-year ahead BER inflation expectations, likely fiscal slippage amid a material upward revision to the public sector wage offer and the Fed and other major central banks continuing to raise policy interest rates in the last two weeks.
They says the MPC will also be alarmed by the acceleration in core and services inflation, which suggests broadening price pressures. The group foresees the Sarb wrapping up the current hiking cycle in March, with the repo rate forecast to remain steady at 7.5% for the rest of the year. “In South Africa, the most recent interest rate increase of 25 basis points in January this year escalated the repo rate to 7.25% and the prime lending rate to 10.75%. Economists warn that we are likely to see another interest rate increase before the end of this month.”
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