South Africa’s central bank raised its main lending rate by a higher than expected 50 basis points to 7.75% in a decision announced on Thursday.

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

South Africa’s rand extended earlier gains to rise nearly 2% against the dollar after the interest rate decision.

“This is a surprise to financial markets,” Rand Swiss Portfolio Manager Gary Booysen said.

The South African Reserve Bank has now raised rates for the ninth time in a row, adding a total of 425 bps to the repo rate since it began tightening policy in November 2021 to tame inflation.

The five-member Monetary Policy Committee (MPC) was split 3-2 in its decision, with 3 members preferring a 50 bps increase and 2 wanting a 25 bps rate increase.

In his speech, central bank governor Lesetja Kganyago said risks to the inflation outlook are assessed to the upside.

“Despite some easing of producer price and food inflation, global price levels remain elevated,” he said.

“Electricity prices and other administered prices continue to present clear short and medium-term risks.”

February consumer inflation in South Africa edged up to 7% year on year from 6.9% in January, data showed last week, signalling that rolling power cuts nationwide may be fuelling price pressures.

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