Annaline van der Poel from Debt Rescue believes the decision not to cut interest rates is a heavy blow to struggling consumers.
“ A reduction would’ve eased the burden of monthly repayments on bonds, vehicle finance, and credit cards, offering some much needed breathing space. Even though inflation has eased slightly to 3.3% essential costs such as food, housing, and utilities remain painfully high.”
Written By: Tamasha Khanyi
SARB’s interest rate pause ‘not necessarily end of cutting cycle’
There have been mixed reactions to the South African Reserve Bank’s move to keep interest rates unchanged.
The Monetary Policy Committee has decided to leave the repo rate at 7%.
Governor Lesetja Kganyago said in a media briefing on Thursday that the economy grew at its fastest pace in two years during the last quarter.
He says a resilient global economy, lower interest rates in the US and UK, a weaker dollar, and stable oil prices have led the central bank to revise its growth forecast for 2025 from 0.9% to 1.2%.
Economist Elna Moolman, who’s Standard Bank Group Head of South Africa Macroeconomic Research, says the MPC’s decision was expected.
“ This is therefore not necessarily the end of the rate cutting cycle, but rather a pause depending on how the inflation forecasts unfold. The Reserve bank’s own models also imply that there could be scope for further interest rate relief if inflation is as benign as is currently forecast.”
While four members of the MPC voted to keep the repo rate as is, two preferred to cut it by 25 basis points.
Annaline van der Poel from Debt Rescue believes the decision not to cut interest rates is a heavy blow to struggling consumers.
“ A reduction would’ve eased the burden of monthly repayments on bonds, vehicle finance, and credit cards, offering some much needed breathing space. Even though inflation has eased slightly to 3.3% essential costs such as food, housing, and utilities remain painfully high.”
The prime lending rate remains at 10.5%.
Rates have been cut by 125 basis points since last September.