SARB to Hold Monetary Policy Meeting
The South African Reserve Bank will hold its bi-monthly Monetary Policy Committee meeting in Pretoria today.
The previous meeting in March saw the Bank increase the central bank interest rate by 25 basis points, citing inflationary pressure due to the Russia-Ukraine war as a key factor in the decision.
In 2022, South Africa returned to its pre-pandemic economic conditions despite social unrest and concerns regarding the Omicron variant of COVID-19. However, with oil prices set to average $103 per barrel this year and post-pandemic supply chain issues impacting many goods, there are fears that average commodity prices may rise significantly.
Given the continuing economic uncertainty spurred by the Russian invasion, expect the Reserve Bank to increase central bank interest rates again following today’s meeting. This is already a trend amid BRICS countries, as India’s central bank raised their central bank interest rate by 40 basis points to combat global inflation. In the longer term, South Africa will likely continue increase central bank interest rates in tandem with other BRICS countries in order to reduce consumer demand and curb national spending, leading to future economic recovery and growth.
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