The Central Bank of South Africa raised its key rate on Thursday by 75 basis points to 6.25%, the second increase in two months, in a context of high inflation.
In July, the Central Bank had already raised its rate to 5.5%, the biggest increase in 10 years.
The monetary policy committee has decided to raise the rate by 75 basis points to 6.25%, central bank governor Lesetja Kganyago told a television news conference.
It is close to that which prevailed before the start of the pandemic, he added.
This new turn of the screw corresponds to analysts’ forecasts. This is the fifth consecutive increase by the Central Bank, which is concerned about the level of price increases and the sharp slowdown in the South African economy.
In South Africa, inflation reached a record 7.8% over one year in July, the highest for 13 years. It fell slightly in August (7.6%) thanks to a drop in fuel prices.
Inflation has reached its highest level in decades in many countries, fueled in particular by the war in Ukraine and the economic recovery following the easing of restrictions linked to the pandemic.
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This situation has prompted several central banks to raise their interest rates, but these measures – which increase the cost of borrowing for companies and individuals – are now fueling the risks of recession.
The South African Central Bank has revised its growth estimates downwards, expecting a slowdown to 1.3% for 2023, before a slight rebound to 1.5% in 2024.