South African Reserve Bank Raises Main Repo Rate to 7.25% From 7%

By Alexandra Wexler

JOHANNESBURG--The South African Reserve Bank on Thursday raised its main repo rate to 7.25% from 7% in an effort to keep inflation in check amid worsening rolling electricity blackouts, a weaker currency and high food prices.

The repo rate remains higher than it was before the start of the Covid-19 pandemic, when the bank sharply reduced rates to support the economy.

The SARB revised down its economic growth forecasts for this year and next, but raised its growth expectations for last year.

The bank now expects Africa's most developed economy to grow 0.3% this year, down from its November forecast of a 1.1% expansion, with SARB Governor Lesetja Kganyago saying that worsening electricity blackouts could reduce growth by as much as 2% this year, up from a previous estimate of 0.6%. In 2024, the SARB expects growth of 0.7%, down from a 1.4% forecast in November. The growth forecast for 2022 was raised to 2.5% from 1.8% due to stronger-than-expected growth in the third quarter.

Breakdowns of South Africa's aging coal power plants and a lack of money to buy diesel for emergency generators have led to rolling nationwide blackouts of up to 11-and-a-half hours a day.

Write to Alexandra Wexler at [e-mail]

(END) Dow Jones Newswires

01-26-23 0856ET