Kganyago: Sharp rate hike aimed at reining in inflation ‘sustainably over time’
South Africa's central bank sharply raised its main interest rate on Thursday as it seeks to tame high inflation, with electricity prices surging amid a wave of power outages.
The bank raised its benchmark rate by 0.5 percentage points to 7.75 percent.
The South African Reserve Bank had slowed its monetary tightening in January, lifting the rate by 0.25 percentage points.
But inflation accelerated to 7.0 percent in February after slowing in previous months.
Central bank governor Lesetja Kganyago said the rate hike aims to rein in inflation "sustainably over time".
South African monetary policymakers started raising rates in November 2021 and unleashed their steepest hike in a decade -- 0.75 percentage points -- in July last year.
That was followed by another 0.75 percentage increase in November before slowing the pace in January.
Kganyago said inflation has been driven by rising fuel, electricity and food prices.
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The bank said that economic growth remained strained due to the electricity supply crisis plaguing the continent's most industrialised economy.
"As a result of extensive load-shedding (power outages) and logistical constraints, the supply performance of the economy remains severely impaired," Kganyago said.
South Africa has been battered by record blackouts that have hampered economic activity over the past year, as problems at beleaguered power utility Eskom have mounted.
The outages are costing more that $50-million in lost output each day, according to estimates by the energy minister.
The economy risks entering recession after shrinking by 1.3 percent in the last three months of 2022.
The central bank said it expects the economy to grow by just 0.2 percent in 2023, revised down from its January forecast of 0.3 percent.
