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Big Rate Hike for South Africa

FILE: South Africa's central bank governor, Lesetja Kganyago, delivers a keynote address on monetary policy, growth and jobs at the University of the Witwatersrand in Johannesburg, South Africa, Taken Nov. 1, 2022.

PRETORIA - South Africa's central bank surprised markets by raising its main lending rate by a higher than expected 50 basis points to 7.75% on Thursday in a bid to tame inflation.

The rate increase was twice the 25 basis point increase expected by the majority of economists polled by Reuters. I

t triggered a surge in the rand , which extended earlier gains to rise nearly 2% against the dollar.

The South African Reserve Bank had slowed its monetary tightening in January, lifting the rate by 0.25 percentage points.

But inflation accelerated to 7.0 percent in February after slowing in previous months.

Central bank governor Lesetja Kganyago said the rate hike aims to rein in inflation "sustainably over time."

February consumer inflation in South Africa edged up to 7.0% year on year from 6.9% in January, data showed last week, signaling that rolling power cuts nationwide may be stoking price pressures.

The central bank targets inflation between 3% and 6%.

This report was sourced from Reuters and Agence France-Presse.