The South African Chamber of Commerce and Industry has warned that the latest 50-point increase in the South African Central Bank’s policy rate will hurt business and destroy jobs.
Reacting to the South African Reserve Bank’s (SARB) decision to raise its policy rate to 7.75%, the chamber’s chief executive Alan Mukoki said it will certainly have a bad impact on the economy.
He noted that the increase in the cost of bank credit would lead to a decrease in the purchasing power of households.
This would mean that consumers would no longer be able to take out home loans, which in turn would have a direct impact on the companies that sell building materials.
SARB Governor Lesetja Kganyago stressed that the objective of the recently adopted monetary policy is to bring inflation back to the midpoint of the target range, noting that it is expected to remain above the goal range until the third quarter of the current year.
Observers say the SARB’s decision could contribute to a worsening economic situation in South Africa.