The Central Bank of South Africa raised its main interest rate slightly on Thursday by 25 basis points, to 7.25%, after several consecutive increases in recent months amid persistent inflation.
The bank’s monetary policy committee has decided to raise the rate by 25 basis points to 7.25%, South African Central Bank Governor Lesetja Kganyago told a Pretoria press conference.
The previous rise in November had taken the rate to 7%, after its largest increase in 10 years in July (5.5%).
Despite signs of slowing inflation that has hit the global economy in the wake of the war in Ukraine, pressure on South African households will remain high with food prices rising 7.3% in 2023 vs. 9.2% in 2022, forecasts the Central Bank. The latter forecasts inflation at 5.4% this year, against 6.9% last year.
In addition, growth prospects are uncertain, in particular because of the endemic power cuts which are paralyzing the continent’s leading industrial power, unable to produce enough electricity, warned Mr. Kganyago.
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The Central Bank expects GDP growth of just 0.3% in 2023, compared to 2.5% in 2022.