LISTEN: Here's why higher repo rates are good for inflation
The South African Reserve Bank raised its benchmark repo rate by another 25 bps to 4.25% at its March 2022 meeting, as widely expected.
Business Watch is a daily feature on East Coast Radio - on-air at 06:30 and 18:30, respectively.
The feature is hosted by economist, award-winning radio producer, WR Van Der Merwe.
WR Van Der Merwe explains the theory of why increased repo rates can lead to lower inflation in an economy:
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Policymakers said that the overall risks to the medium-term growth outlook are assessed to be balanced, while the risks to the inflation outlook are assessed to the upside
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According to ECR Newswatch, Reserve Bank Governor Lesetja Kganyago says the Monetary Policy Committee was divided about how much they should increase the rate.
"In the near-term, headline inflation has increased well above the mid-point of the inflation target band and is forecast to breach the target range in the second quarter.
Read more: SA Reserve Bank hikes repo rate again
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