MPC hikes repo rate by 25 basis points, with another hike likely in July

By Thebe Mabanga

The Reserve Bank Monetary Policy Committee (MPC) hiked the repo rate by 25 basis points to 7% on Thursday, and painted a gloomy picture of the country’s growth and inflation outlook.

Announcing the committee’s decision, Reserve Bank governor Lesetja Kganyago said that since the last MPC meeting, hopes for a quick end to the Middle East crisis had faded.

This had heightened global uncertainty, with the continued closure of the Strait of Hormuz affecting the price of oil and petroleum products, fertiliser and other chemical inputs.

The outlook for South Africa is equally gloomy.

“Moving to South Africa, we have lowered our growth forecasts for the next two years,” Kganyago said.

“Before this shock hit, the economy seemed to be gaining momentum, with… data mostly positive. Now, however, we face a painful combination of higher global uncertainty and reduced disposable income. This will hit both investment and