The South African Reserve Bank Governor Lesetja Kganyago in announcing the Monetary Policy Committee’s decision to hike interest rates 25bps revealed the bank has revised its growth forecasts for South Africa downwards.
The central bank expects South Africa’s gross domestic (GDP) product growth in 2015 to be 1.4 per cent and 1.5 per cent in 2016. He also argued that the country outlook remains fragile.
The governor warned that inflation was a risk and that if SARB failed to react it could become a bigger problem in the future therefore the MPC decided to react now rather than later.
The repo rate is now at 6.25 per cent and prime at 9.75 per cent.