JOHANNESBURG - Following the South African Reserve Bank’s (SARB) decision earlier today to cut its lending rate by 0.25%, FNB confirms that it will reduce its prime lending rate to 9.75% from 10% with effect from Friday 17 January.
FNB CEO Jacques Celliers said, “While not widely expected, today’s rate change is most welcome for both consumers and SMEs. A cut, albeit small, will lift activity in all sectors in the coming months. While the country awaits the National Budget Speech to chart South Africa’s new growth path, we believe that urgent intervention is necessary to restore a more reliable energy supply. The lack of reliable supply does not only weaken collective efforts to grow our economy, it poses a challenge to business stability, especially in the SME sector.”
“As we start a New Year, many consumers and businesses are seeking ways to rein-in costs. We have noted an ongoing and accelerating move into digital and self-service channels where bank charges are more affordable and convenient. At the same time, our customers are actively using the eBucks rewards programme to stretch their budgets. We see these trends building throughout the year as the country continues to grapple with low growth,” Celliers said.
Mr Celliers further urged consumers to avoid taking on excessive debt. He says finances should be managed to ensure balance and ongoing focus on day-to-day household expenses like back to school costs, food etc.
Siphamandla Mkhwanazi, Senior FNB Economist said, “The SARB’s decision to cut the policy rate came earlier than initially anticipated. The SARB assessed that the elevated domestic event risks (the upcoming February 2020 Budget Speech and Moody’s ratings decision) and renewed risks on the global front (the US-Iran tensions), have been outweighed by the lower domestic inflation and the weak economic growth environment.”
“The combination of slowing consumer spending, shrinking mining and manufacturing activity suggest that economic growth will likely remain relatively subdued for some time. As such, we expect inflationary pressures on the economy to remain relatively benign, which should see inflation contained close to the midpoint of the target in 2020. Nevertheless, we expect the SARB to keep near-term interest rates relatively steady, given the fiscal challenges the country faces,” concludes Mkhwanazi.
BUSINESS REPORT ONLINE