Wage settlements during the first half of this year have come in above inflation1, further squeezing margins of firms and raising the prospect of more entrenched wage inflation. The SARB’s Monetary Policy Committee (MPC) has moved to normalise rates, raising the repo rate by a cumulative 200 basis points since November 2021.
4 Countercyclical capital buffer These cyclical risks can emerge together and reinforce each other. An unexpected economic downturn could be amplified if banks restrict their lending. In order to prevent dangers to financial stability, banks must maintain capital buffers designed to absorb losses. Macroprudential capital requirements serve precisely this buffer function.