SARB Raises Repo Rate As Middle East Conflict Fuels Inflation Risks
The South African Reserve Bank (SARB) has raised the repo rate by 25 basis points to 7.25%, citing heightened inflation risks and an increasingly uncertain global economic environment.
The decision was taken by the Monetary Policy Committee against the backdrop of rising geopolitical tensions and renewed pressure from higher fuel prices.
The central bank said the conflict in the Middle East had escalated since its previous meeting, while the Russia-Ukraine war continued to disrupt refinery capacity.
According to the SARB, the combined impact of these conflicts is contributing to a large and persistent global supply shock, increasing the risk of higher inflation.
Kganyago Warns Of Renewed Fuel Price Pressure
SARB Governor Lesetja Kganyago said the outlook had become more challenging as the earlier easing in fuel price pressures had reversed.
“A few months back, it seemed that the fuel-price shock might be unwinding, but now it has intensified,” Kganyago said.
He added that global interest rates were also moving higher, while the SARB was taking a measured approach to monetary policy amid continued uncertainty.
The central bank said its focus remained on maintaining price stability as it assesses the impact of global developments on the South African economy.