Repo rate hike will be hard-felt by consumers – financial service firm
The decision by the South African Reserve Bank to raise the repo rate will be hard-felt by consumers, most of whom are already struggling to make ends meet, a financial service provider said on Friday.
South Africa's central bank on Thursday raised the benchmark repo rate by 25 basis points from 6.5 percent to 6.75 percent, despite weak economic growth, saying delaying the adjustment could cause inflation expectations to become entrenched at higher levels.
The repo rate is the benchmark interest rate at which the central bank lends money to commercial banks. Changes in the repo rate affect the prime rate at which commercial banks in turn lend to consumers, which has also gone up to 10.25 percent.
“The announcement should already caution consumers on overspending ahead of the festive season," said Danny Zandamela, chief executive at Ithala, a financial service and credit provider based in KwaZulu-Natal.
"After working hard all year to keep your finances afloat and credit rating intact, it is advisable to continue exercising financial discipline as times get tougher."
Zandamela said over-indebted consumers would bear the brunt of the hike as they grappled with added expenses and less disposable income.
Reserve Bank Governor Lesetja Kganyago told a news conference on Thursday that the monetary authority was looking at four 25 basis points hikes in interest rates by the end of 2020. This would bring the repo rate to 7.5 percent.
Zandamela said it was important to distinguish between “needs” and “wants and while it was important to reward oneself, this must be done in moderation so as not to offset good financial standing.
Comments
Research Reports
Projects
Latest News
Showroom
Leading condition monitoring specialists, WearCheck, help boost machinery lifespan and reduce catastrophic component failure through the scientific...
VISIT SHOWROOM
At SMS group, we have made it our mission to create a carbon-neutral and sustainable metals industry.
VISIT SHOWROOM
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
