As the week unfolds, South African consumers are eagerly awaiting the Reserve Bank’s decision on interest rates, hoping it will bring an end to one of the longest interest rate hiking cycles in recent times. Since November 2021, the bank has implemented ten consecutive rate hikes, pushing the repo rate up by a substantial 425 basis points. These relentless increases have burdened consumers, who now face the challenge of escalating loan repayments, while banks report a rise in bad debts.
Reserve Bank governor, Lesetja Kganyago, has issued a cautionary message, asserting that rate cuts will not commence until there is a firm belief that inflation is on a downward trajectory towards its target of 4.5 percent. Presently, inflation stands at 6.3 percent, posing a significant concern for the economic landscape. The decision made by the Monetary Policy Committee (MPC) in the upcoming days will have profound implications for both the financial sector and the broader South African population.
As the nation braces for the crucial MPC verdict, stakeholders closely monitor inflation indicators and economic data, while consumers hope for a much-needed respite from the relentless upward march of interest rates.