Guiding consumers since 2009

SARB: Repo rate not likely to decrease soon

By Jessica Anne Wood

Governor of the South African Reserve Bank (SARB) Lesetja Kganyago told Bloomberg in an interview last week, that South Africa may be at the end of its rate hiking cycle. However, this does not mean that the interest rate will start to decrease any time soon. The interview was held at the World Economic Forum on Africa conference in Durban.

Kganyago said in the interview: “We could be coming to the end of our hiking cycle. That you are coming to the end of the hiking cycle does not mean that you are commencing a cutting cycle.”

At the most recent Monetary Policy Committee (MPC) meeting in March, the repo rate was held at 7%. At the time, Kganyago said: “The MPC is of the view that we may have reached the end of the tightening cycle. However the Committee would like to see a more sustained improvement in the inflation outlook before reducing rates. This assessment may, however, change if the inflation outlook and the risks to the outlook deteriorate.”

However, two credit ratings agencies, Fitch Ratings and Standard & Poor’s (S&P) recently downgraded the country to junk status. Several financial institutions were subsequently downgraded by S&P too. Recently appointed Minister of Finance Malusi Gigaba is making attempts to show that the country’s financial policies have not changed in a bid to prevent ratings agency Moody’s from downgrading the country to junk status too. Moody’s is set to make their announcement in the coming weeks.

Andre Botha, dealer at TreasuryOne, noted that while Gigaba spoke of radical economic transformation, as well as of the many action plans of former Finance Minister Pravin Gordhan, it is unclear whether these plans will be implemented. Botha added that locally the Rand performance is looking to political issues rather than economic issues for direction.

The uncertainty that junk status present may see SARB holding off on lowering the repo rate for some time, as the country struggles to work its way out of junk status.

Recent Articles

Featured Are you entitled to your spouse’s pension after divorce?

Divorce means more than just parting ways with your partner. It may also involve parting ways with your assets. The Divorce Act states that your retirement fund forms part of your assets. This means that it will be considered when dividing up your assets.

Retrenched – what payments are you entitled to?

In the current struggling economic climate, retrenchments are a regular occurrence and not everyone survives the cut. If you find yourself on the receiving end of retrenchment you may have questions about the payments that are due to you.

Do you want to settle your debt?

You may be considering settling your credit account, whether it’s a credit card or various store accounts, now may be as good a time as any. This especially if you have saved, or you received a tax return or salary bonus. 

Can you afford a personal loan?

Taking out new debt is not always a choice. However, if you’re not pressed by a medical emergency or an unforeseen disaster, it’s worthwhile considering whether you can actually afford it. But what does it mean to “be able to afford a personal loan”? What percentage of your income should you not exceed dedicating to it? 


Pick n Pay Black November Launch Deals

Price: Available on request
When: Until 05 November 2019
Where: Online

Bakwena Spa Black Friday Special

Price: From R1,100
When: From 29 November - 06 December 2019
Where: Cape Town, Centurion, Hartebeespoort

Premier Hotels and Resorts Black Friday Deal

Price: Available on request
When: 29 November -02 December
Where: Nationwide