By Angelique Ruzicka, editor, Justmoney
The South African Reserve Bank (SARB) is unlikely to increase interest rates this afternoon when it makes it's announcement at 3pm, according to John Loos, household and property sector strategist at FNB Home Loans. “We do acknowledge that the rand issue must be bugging the SARB but we don’t expect a hike announcement today,” said Loos.
The rand hit a five year low against the dollar this month. Other currencies, including the Turkish Lira have also been affected negatively this January.
The looming strike threats at one of the top three platinum producers has resulted in a dip in confidence over South Africa as an investment destination.
Most analysts predict that the SARB will keep rates on hold, however, Investec Asset Management’s Peter Kent said his company was 80% sure that a hike would occur.
According to reports, Kent said: “We’re not arguing that it’s a nice outcome, but unfortunately South Africa faces some tough choices at the moment. Our economy is out of kilter, we’re spending beyond our means and we’re importing more than we export. As a result of that, our currency’s under considerable pressure. It’s completely altered the inflation outlook.”
Loos said an interest rate hike should not be discounted in the future. “Just like death and taxes are a guarantee so are interest rate hikes,” said Loos.
He added that at this stage it may be too late for home owners to secure an attractive fixed mortgage rate. “I suspect that fixed rates will now be less attractive amidst all the talk of a interest rate hikes. The most attractive time to fix rates is really when interest rates are going down,” he said.