Repo rate hike: More economic pain for South Africans while economic reform stalls
21 July 2022
The decision by the South Africa Reserve Bank (SARB) to increase the repo rate by 75 basis points, while widely expected, brings more economic pain for South Africans who are already struggling to keep their heads above water in a non-performing economy.
This is the highest increase in the repo rate that the SARB has made in over 20 years. It not only confirms the weak economic fundamentals in the local economy, but also highlights its inability to withstand negative headwinds from a struggling global economy.
With a high inflationary environment driven by rising costs in fuel, food, housing and transport, South Africa now runs a serious risk of an increasing food poverty rate among low income households.
South Africa could have been better prepared to absorb most of the economic shocks had the economy been better managed. Sadly, the economy is in the middle of a confidence killing energy crisis and the economic structural reform process appears to have stalled.