Repo Rate Increase
Few people were surprised this week when the SA Reserve Bank Monetary Policy Committee (MPC) announced yet another hike in the Repo Rate.
In reaction to climbing inflation the MPC announced that rather than pause repo rate increases until their following meeting (everyone had been told to expect a rise then) factors have moved them to introduce a 25 base point increase this month.
4.25% per annum
The, now 30 day long, war in Europe and pressures caused due to rising oil and wheat prices were obvious factors that the MPC had not anticipated in their previous planning on when to push rates up higher. The sudden spike that has occurred in inflation needs to be accounted for sooner rather than later and so the MPC have brought forward the next in a series of rate hikes which are going to happen over the next 2 years.
The prime lending rate at commercial banks now increases to 7.75%
There was discussion of a 50 base point increase this month but it was decided to continue the more gradual increase plan.
Strong Rand Has Helped
Fortunately for local SA consumers the Rand has been doing reasonably well on the back of international trading looking for alternative investment and high yeild trading and this has somewhat taken the edge off what has happened since the war broke out. At the same time renewed strike action and reports of xenophobic violence is placing the currency under some negative pressure which is limiting gains.
With more rate hikes on the books and increasing prices for electricity, transport and basic foodstuff those consumers who are living on credit can only look forward to more rate hikes and increasing repayments on their existing debts. If you are stuck relying on credit to make ends meet please talk to a NCR registered Debt Counsellor for advice.