The Reserve Bank has increased the repo rate by 50 basis points, resulting in a repo rate of 4.75% and prime lending rate of 8.25%.
The motive behind this significant increase is to combat South Africa’s annual inflation, which is rising rapidly. In April 2022, inflation held at 5.9%.
The Reserve Bank uses inflation targeting within the monetary policy, in order to protect the value of the Rand. They aim to maintain consumer price inflation between 3% and 6%.
As such, it is expected that the Reserve Bank will raise rates by 50 basis points in July as well. The economy expects to see the policy rates ending 2022 at 5.75% and a higher terminal rate of 6.50% by end-2023.
With the ongoing pressures within the economy, business is encouraged to manage their financial affairs with skill and dedication. Having access to knowledgeable and reliable professionals has become paramount for business operations going forward.
With the rising costs in South Africa, having full-time professionals is not always possible, as such consider outsourcing services and operational needs to PRN Advisory and Tax Services.
Visit our services for more information.
 South Africa Reserve Bank: https://www.resbank.co.za/en/home/what-we-do/monetary-policy
 Business Tech: https://businesstech.co.za/news/banking/571344/bigger-interest-rate-hikes-are-coming-economist/