South African Reserve Bank bumps up repo rate to 6.75%

The governor Lesetja Kganyago of the South African Reserve Bank has announced in Pretoria that it will increase the current repo rate with  0.25% from 6.5% to 6.75%. This is an increase of 25 basis points.

The South African Reserve Bank (SARB) regulates our economy by lending money to the commercial banks at a set interest rate.  This interest rate is known as the repo rate and is also referred to as the repurchase rate.

SARB regulates the interest rates that commercial banks charge us, as consumers, for financial products, to prevent an excessive growth of bank lending and counter inflation. Inflation refers to the rate at which prices for services and goods increase over the years.

When the repo rate increases to 6.75%, the prime lending rate will increase to 10.25%.

The forecasted endogenous interest rate path is built into our growth and inflation outlook. As emphasised previously, the implied path remains a broad policy guide which can and does change in either direction between meetings in response to new developments and changing risks.