Reserve Bank Deputy Governor Kuben Naidoo says they face a fundamentally changing economic environment.
Rising inflation has become a serious concern for both real incomes and consumption, with food prices and transport costs showing upward trends.
Rising interest rates are also expected to weigh on consumers, with economists predicting a further 1 percentage point rise this year, the equivalent of a 25 basis point hike at each monetary policy committee meeting. from the Reserve Bank until the end of the year.
The bank has already raised interest rates by 75 basis points, a 20% increase in the repo rate.
Last week, the Reserve Bank’s Monetary Policy Committee adopted an aggressive rate policy by raising lending rates by 50 basis points.
He warned that the rising cost of living could lead to social unrest.
Naidoo says, “We started normalizing interest rates in November. Our view is that we will want to standardize gradually over a period of two to three years. The three and a half percent was an artificial, COVID-induced law. But we thought we were in a pretty good space, we could move slowly and incrementally as the economy recovered. But the war in Ukraine changed that. And inflation also changed that equation and we had to grow a little faster than we probably would have otherwise.
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