Johannesburg (awp/afp) – South Africa’s central bank on Thursday raised its main interest rate by a quarter point, to 4%, in an attempt to curb inflation.
The monetary institute had reduced this rate in July 2020 to a historically low level, 3.5%, to mitigate the economic shock of the pandemic. But inflation having increased, the central bank had first raised this rate by 0.25 points in November before adding a new quarter of a point on Thursday.
Inflation in December was higher than expected, at 5.9%, driven by higher fuel and electricity prices, approaching the upper end of the range targeted by the Institute of emission, between 3% and 6%.
Governor Lesetja Kganyago estimated that inflationary pressure is likely to continue but nevertheless assured that a “gradual increase in the repo rate will be enough to contain inflation expectations and moderate the future path of interest rates”.
The record unemployment rate of 34.9% has increased pressure on the South African government to revive the economy. The Central Bank predicts economic growth of 1.7% in 2022.
afp/rp