JOHANNESBURG, Jan 26 (Reuters) – South Africa’s central bank on Thursday raised its main lending rate by 25 basis points to 7.25%, smaller than the 50 basis point increase expected by the majority of economists polled by Reuters.

Three members of the bank’s Monetary Policy Committee preferred the 25 basis points increase, while two members preferred a 50 basis points increase, Lesetja Kganyago, Governor of the South African Reserve Bank, said.

“The revised repurchase rate remains supportive of credit demand in the near term, while raising rates to levels more consistent with the current view of inflation and risks to it,” he said in his statement.

He also warned the effects of persistent rotational power cuts on the economy, with the state power utility having implemented power cuts since around mid last year.

“While economic growth has been volatile for some time, prospects for growth appear even more uncertain than normal. A material reduction in load-shedding (power cuts) would significantly raise growth,” the governor added.

The bank now forecasts the economy will grow 0.3% in 2023 and 0.7% in 2024, a worse prediction than at its last MPC meeting in November.

It sees consumer inflation of 5.4% in 2023 and 4.8% in 2024.

December consumer inflation in South Africa dipped to 7.2% year on year from 7.4% in November, data showed last week, in a sign the price pressures have been gradually easing in Africa’s most industrialised economy.

The central bank targets inflation between 3% and 6%.

(Reporting by Bhargav Acharya, Alexander Winning and Kopano Gumbi; Editing by James Macharia Chege)