Lesetja Kganyago, the governor of the South African Reserve Bank (SARB), announced today that the repo rate (repurchase rate) will remain unchanged at six percent per annum.
Kganyago said: “As noted in previous statements, the MPC (Monetary Policy Committee) has to achieve a fine balance between realising its core mandate and not undermining short term growth unduly. The MPC has unanimously decided to keep the repurchase rate unchanged for now at six percent per annum.
“The MPC remains on a gradual policy normalisation path. The Committee will continue to monitor developments closely, and will not hesitate to act appropriately should the risks to the inflation outlook deteriorate materially. As before, any future moves remain highly data dependent.”
What does this mean for consumers?
Ian Wason, CEO DebtBusters, noted: “No change in the repo rate comes as a great relief, but consumers must not think they are in the clear just yet. The recent poor performance of the Rand against other major currencies as well as a drought that has pushed the agricultural sector into a recession in the second quarter of this year, means that food price hikes are expected. Consumers are going to end up paying more for staples such as maize, meat, eggs and dairy products.”
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An increase in living expenses will impact on people’s ability to service their debt. When living expenses go up, people are prone to lend money in order to tide them over, which can place more strain on them, and add another expense to the list they already have to cover.
“South Africans need to prepare themselves for the storm that’s coming and must find ways of cutting back on expenses and paying back debts so that they are not forced into opening other lines of credit to pay back loans that they already have. Those that are finding it difficult to meet their debt obligations, and are dependent on credit to pay for food, must seek help from an accredited debt counsellor,” added Wason.