The Reserve Bank has increased the interest rate by 50 basis points. Reserve Bank Governor Lesetja Kganyago made the announcement while delivering the central bank’s first monetary policy statement of the year in Pretoria on Thursday.
“Given the deterioration in the inflation outlook, the MPC decided to increase the re-purchase rate by 50 basis points to 6.75% per annum effective from the 29th of January 2016. Three members supported a 50 basis point increase, two members preferred a 25 basis point increase whilst one member preferred no change. The MPC still views the stance of monetary policy to be accommodative,” Kganyago said.
Kganyago announced that interest rates would be hiked to 6.75%, this comes on top of a proposed 8% hike in electricity rates.
According to Debt Rescue CEO Neil Roets, the increased repo rate means an almost immediately translate into higher prices for all commodities including food, warned Roets.
“The immediate future looks dismal for all consumers, but especially for consumers with heavy debt loads.
“There is also a strong likelihood that South Africa’s staple food – maize meal – may increase by as much as 50%. According to experts, this is going to mean that many South Africans are going to experience hunger,” warned Roets.
“The depreciation of the rand, which hit all-time lows recently, is going to increase the price of all imported goods including the 5 million tonnes of maize, which would have to be imported and then distributed countrywide. Because of limited bulk rail capacity, some of this would probably have to be transported by road.” Additional reporting by News24
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A New Year’s blow for indebted consumers.
Any household with credit should brace itself for yet higher expenses going forward.
A household with a R300 000 bond will now pay close on R100 more a month.
A R500 000 home will cost households roughly R220 more a month.
While a million rand property will now set the bondholder back around a further R330.