JOHANNESBURG: South Africa’s central bank Thursday hiked its benchmark interest rate for the second time in a row in a bid to tackle soaring inflation.

The South African Reserve Bank made the quarter-point increase to 4.25 percent.

It had already raised rates in January, also by 25 basis points.

The bank in 2020 drastically slashed interest rates to a low of 3.5 percent to help the economy weather the pandemic but like other monetary policymakers around the world it is acting to combat soaring consumer prices.

Central bank governor Lesetja Kganyago said the decision was based on rising inflation, which is forecast to breach the bank’s target range in the second quarter.

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The bank forecasts headline inflation for this year to reach 5.8 percent, primarily due to higher food and fuel prices.

“Some risks to the inflation outlook, like food and fuel, have been realised, and other risks, such as currency volatility and capital flow reversals, have become more pronounced,” he said.

“Economic and financial conditions are expected to remain more volatile for the foreseeable future,” he said.

He cautioned that inflation could remain high, especially if the war in Ukraine continues into the agricultural planting season.

“Oil prices increased strongly through 2021 and are up again sharply… propelled higher also by the war and economic sanctions,” he said.