Reserve Bank governor Lesetja Kganyago says the Russia-Ukraine war is likely to reduce global economic growth and contribute to higher inflation. He anticipates that the war will probably impair production of a wide range of energy, food and other commodities, and further disrupt global trade. In line with this, local food price inflation has been revised upwards to 6.1% in 2022 from 4.8% previously, largely on the back of higher global food prices.
“Inflation, tighter monetary policy and the downstream impact of international conflict are examples of the contributing factors. Despite this, we are seeing a sustained return to improved economic growth in South Africa, driven by higher commodity prices and a return to pre-pandemic conditions. By raising the repo rate, the SA Reserve Bank maintains its growth-friendly stance.
As a result of the latest rate hike, and based on a home loan at the base rate over 20 years, homeowners and property buyers will need to budget for increased repayments as follows:pandemic and it is generally still cheaper to buy than rent. “The MPC also sounded quite hawkish, talking of inflation approaching the upper end of the target band and, although it revised its GDP growth forecast upwards for 2022 to 2%, it lowered the 2023 and 2024 forecasts to 1.9% for both years, saying it will react accordingly going forward,” he says.