The Monetary Policy Committee (MPC) announced that the repo rate will remain at 7%. According to Dr Andrew Golding, CE of Pam Golding Property Group, the South African Reserve Bank (SARB) made the right decision to keep the repo rate on hold.
“Maintaining a stable repo rate not only sends a positive signal to South Africa’s housing market at this opportune time of year, it reaffirms ongoing investor confidence in the residential property market, which continues to experience a groundswell of demand among a new generation of young or first time home buyers,” said Golding.
Following the announcement, First National Bank (FNB) stated that it will maintain its prime lending rate at 10.5%. “This year will go down as one of the most difficult periods for businesses and consumers. Even if our economy grows fractionally above zero, we desperately need to achieve far higher growth rates to address the unemployment crisis,” said FNB CEO Jacques Celliers.
Sizwe Nxedlana, chief economist at FNB, noted that SARB’s decision is in line with consensus expectations. “We continue to believe that the SARB has reached the peak of its hiking cycle, but remain mindful of the negative implications of further rand weakness on the inflation outlook.”
The credit ratings decision
However, there are still concerns that consumers need to be aware of. The ratings agencies will review South Africa’s credit rating, with fears that we may be downgraded to sub-investment grade.
Celliers highlighted: “With ratings reviews of South Africa just a few days away, consumers are justifiably wary. By keeping rates on hold at a time when US rates are likely to increase in December, the SARB is taking a courageous step to support our economy and lift confidence.”
Head of marketing at DebtBusters, Damon Sivitilli said: “The economy is currently growing below projections and all South Africans need to be financially savvy with the income they get by creating realistic budgets and sticking to them. Saving is not the easiest of tasks but starting small and being consistent will prevent many consumers from borrowing when they are faced with emergencies.”
For more information on the looming credit ratings decisions, click here.
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