The South African Reserve Bank raised its repo rate by 50 basis points to 8.25% on Thursday, as it lifted its inflation forecasts for this year and next and said risks were to the upside.

The decision was unanimous.

The Reserve Bank has now raised rates for the 10th time in a row, adding a total of 475bps to the repo rate since it began tightening policy in November 2021. The rate increase was larger than the 25bps increase expected by the majority of economists.

The central bank is trying to bring inflation back within its target range of 3-6%. Inflation fell more than expected to 6.8% year on year in April from 7.1% in March, data showed on Wednesday.

But the Bank’s updated forecasts released on Thursday showed that it now expects 2023 inflation to average 6.2%, up from 6% previously.

“With core goods and food higher in the near term, headline inflation for 2023 is revised up,” the Reserve Bank said in its monetary policy statement. “Given upside inflation risks, larger domestic and external financing needs, and load shedding, further currency weakness appears likely.” — Anait Miridzhanian, Bhargav Acharya and Kopano Gumbi, (c) 2023 Reuters