Another Repo Rate Increase

By: Bright Ntuli

The South African Reserve Bank Bank has announced that the repo rate will increase by another 25 basis points to 4%.

This is set to bring commercial banks’ prime rate to 7.5%.

According to governor Lesetja Kganyago, consumer inflation for the year to December was 5.9 %, the biggest increase in almost five years. He says increased inflation, driven by rising fuel and electricity prices are the man reasons behind the increase in repo rate.

Kganyago has warned that risks to the inflation outlook are to the upside.

Announcing the Monetary Policy Committee’s decision, Kganyago  has warned that risks to the inflation outlook are to the upside, adding that global producer price and food price inflation continued to go higher in recent months and could do so again.

Meanwhile, financial experts have warned that consumers will be affected in two folds.

FNB Money Management Product Head Ester Ochse, explains how this hike will affect consumers.