This afternoon SA Reserve Bank governor Lesetja Kganyago announced a 25 basis point (0.25%) rise in the repo rate, from 3.5% to 3.75%, as decided by the bank’s Monetary Policy Committee. He cited inflation fears, particularly fuel price inflation, and a weaker rand as reasons for the hike, which marks an inflection point in the interest rate cycle.
This means, if the banks follow suit, that you will pay more for credit, but not much more. For example, on a R1 million bond over 20 years, with a rise in the prime rate from 7.0% to 7.25%, your monthly repayments will rise from R7 753 to R7 904, or by about 2%.
Meanwhile, Consumer Price Index inflation was 5.0% year-on-year in October, remaining at September’s level, according to recently released figures from StatsSA.
FNB economist Koketso Mano says major contributions to inflation were from vehicles (which increased 5.1% year-on-year), restaurants and hotels (up 4.1% y/y), and alcoholic beverages and tobacco (up 4.0% y/y). Fuel prices remain high relative to the same period last year, rising by 23.1% y/y. Food and non-alcoholic beverage inflation increased by 6.1% y/y.