The South African Reserve Bank has hiked interest rates by 50 basis points.
The South African Reserve Bank’s Monetary Policy Committee has voted to hike interest rates in the country by 50 basis points,The latest rate hike marks the tenth hike in the current cycle, with the total adjustment being 425 basis points since the hike cycle started in November 2021.
The South African economy contracted by 1.3% in the fourth quarter of 2022, considerably worse than the SARB had anticipated back in January. This was due to the persistent load shedding over the period, Kganyago said. Estimates of the average stages of load-shedding is multiplied by the number of days and then multiplied by the cost to GDP per stage-day. The cost per stage has been revised lower for stages 1 and 2. In nominal terms, these costs vary between R0-R1.2 million for stages 1 and 2 and up to R204-R899 million for stages 3 to 6, when continued on a 24 hour basis on weekdays.
“Load shedding may additionally have broader price effects on the cost of doing business and the cost of living, in particular as diesel consumption increases. Given sticky petrol and higher food price inflation, considerable risk still attaches to the forecast for average salaries.”
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