What will happen with the interest rate this week?
In July the Monetary Policy Committee (MPC) announced a 0.25% increase in the repo rate, which pushed it up to six percent.
According to a report, the rate hike in July went against what economists were expecting. However, in light of the previous rate hike, and the US Fed maintaining interest rates last week, experts believe that it is likely that the SARB will put off a rate hike for the time being.
Repo rate likely remain unchanged
“Our original forecast had been that there was around a 60% chance of a hike at this meeting because of the move in the currency. However, we are now sitting on the fence and see a marginally stronger likelihood of rates unchanged,” revealed Peter Attard Montalto, a research analyst at Nomura, a financial services group.
“We think it will come down to the SARB Governor and a desire to be at, not ahead of, ‘the curve’, and the desire to hike as little as possible,” added Montalto.
However, while Montalto pointed out that Nomura do not believe a rate hike is likely to be announced MPC tomorrow, they believe that the SARB will make a “soft pre-commitment on a November change.”
The decision to hike the repo rate or to keep it unchanged may be affected by the results of the Consumer Price Index (CPI), which are also being released on Wednesday, according to Montalto.
“With a moderately low CPI survey month, there is unlikely to be major cause for upset in the CPI that could drive the MPC, but any major upside or downside surprise could shift the needle slightly one way or the other,” said Montalto.
What would a rate hike mean for consumers?
If there is a rate hike on Wednesday, it will push up the cost of borrowing for consumers, as any type of loan (including credit cards and store cards) are based on the repo rate. In addition to this, the cost of food and goods would also increase as stores pass along the increase in their expenses.
A hike in the interest rate will also increase the cost of debt. This means that any consumers who are already struggling to pay off their debt will battle even more, while consumers who are only just surviving, will start to feel the burden of their debt.
Before taking out more debt to try and cover your expenses, speak to a financial advisor or debt councillor, who could help you better structure your finances to help you cope with your debt and the rise in cost of living.
Featured Financial conflict can lead to divorce – here’s how to prevent it
Talking about money is an intimate matter, and it may be uncomfortable for couples who’ve managed to avoid this discussion. However, it will become necessary at some point or other. Do you think you’re ready to talk to your partner about money?
This is how much you should spend on accommodation
As your salary changes over time, your expenses will change too. But what if you’re spending an exceedingly large percentage of your income on accommodation? Is it feasible or even recommended in our current stressful financial climate?
How to be “future greedy” with passive income
Setting up numerous streams of income is a safe way to protect yourself from the loss of your main stream of income. Better yet, setting up passive streams of income will ensure you always have money coming in, without costing you additional working hours. So, what is “passive income”, and how can you earn this?
Can your debt be cancelled?
It sometimes happens that you struggle so much to pay your debt that you think of asking your creditor to write it off. But debt doesn’t just get written off. There are conditions that must be met and procedures that must be followed before the creditor cancels your debt.
FNB senior customers can earn up to 30% back in eBucks at Clicks
Price: Available on request
When: From 5 August 2020
Bakwena Spa Women’s Day Special
Price: R549 per person
When: Until 31 August 2020
Where: Centurion, Hartbeespoort, Kuils River
Dis-Chem Pap Test Special
When: From 3 August to 11 September 2020