Reserve Bank governor Gill Marcus. Photo: Simphiwe Mbokazi.

Johannesburg - South African Reserve Bank Governor Gill Marcus said the January interest rate increase wasn’t a “one-off move” and raising the benchmark rate by 25 basis points is a possibility.

The economy is in a “moderate extended cycle,” which means borrowing costs may not be adjusted at each Monetary Policy Committee meeting or move by the same amount, Marcus said in a speech in Johannesburg today.

Policy makers left the benchmark repurchase rate unchanged at 5.5 percent for a second meeting in May to help support the economy even as inflation exceeded the bank’s 3 percent to 6 percent target band.

The longest mining strike in the nation’s history that’s shut the world’s largest platinum mines is threatening to push the economy into its first recession in five years.

“The domestic economy is facing enormous headwinds,” caused in part by the worsening labour environment, Marcus said.

“Monetary policy cannot resolve these issues, nor can it deal with structural constraints to longer-term growth. Rather, the role of monetary policy is to contribute to a stable macroeconomic environment conducive to inclusive higher growth.”

Marcus said while a 25 basis-point increase may have little effect on its own, “seen in the context of a longer cycle, it could be part of a cumulative increase, particularly should the MPC wish to see a smoother and more gradual adjustment.”

The Reserve Bank hasn’t adjusted the benchmark rate by less than 50 basis points since 2000.

The rand fell 0.5 percent against the dollar to 10.6925 as of 9:45 a.m. in Johannesburg, taking its decline this year to 1.9 percent.

Forward-rate agreements starting in four months rose seven basis points to 6.26 percent. - Bloomberg News