South Africa’s reserve bank raises rates by 25 basis points to tame inflation

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South Africa’s Reserve Bank has raised its benchmark repo rate by 25 basis points to 7.0 percent as it tries to tame rising inflation despite slow growth.

Reserve Bank Governor Lesetja Kganyago raised the rate against expectation of analysts who were betting on rates to remain unchanged.

But Kganyago said the monetary policy committee remained concerned about the weak growth outlook amid negative business and consumer confidence.

The bank targets inflation at between 3 percent and 6 percent.

The prime lending rate now stands at 10.5%. Markets have  been rattled by the spat between Finance minister Pravin Godhan and the police.

And recent claims that a wealthy family with close ties to President Jacob Zuma may have been behind his decision to sack the country’s respected finance minister Nhlanhla Nene in December have worsened the situation.

President Zuma dismissed claims in parliament.

He insists that his appointments are not influenced by any quarters other than the ruling ANC party.

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