The South African Reserve bank (SARB) raised its main policy rate by 25 basis points to 7% on Thursday, saying inflation risks stemming from higher oil prices had intensified and the challenge of large and overlapping shocks would likely trigger second round effects.
SARB governor Lesetja Kganyago said hopes for a quick end to the Middle East crisis which has strangled the flow of oil through the Strait of Hormuz had faded since the previous meeting of the monetary policy committee (MPC) in March.
“Oil prices have fluctuated around $100 per barrel. In this context, global growth forecasts have been marked down, while inflation forecasts have been revised higher,” Kganyago told a media conference.
“Looking forward, we have raised our oil price assumptions. In addition, we see renewed pressure on food prices, with the agricultural sector facing higher costs for both diesel and fertiliser.”
He said the SARB’s forecast now has headline inflation averaging 4.4% this year and 3.7% next year, before returning to the 3% target in 2028. Core inflation is also higher, peaking early next year. Related News Hormuz chaos pushes World's third-largest oil importer into Nigeria's embrace Fulham reject permanent €24m deal for Samuel Chukwueze NDC releases full list of electoral committee members for 2027 nationwide primaries
