CAPE TOWN - Lowering the interest rate would have cheered up the festive mood for floundered and over-indebted consumers, says Dr. Michael Ade, chief economist of the Steel and Engineering Industries Federation of Southern Africa.
The South African Reserve Bank Governor, Lesetja Kganyago on Thursday, announced that Interest rates will remain unchanged at 6.75% .
"This is bleak news for consumers who would have preferred to start the festive season in a buoyant mood, with some spare spending money," Ade said.
However, FNB on Thursday confirmed that it will maintain its prime lending rate at 10,25% and will review its position after the next SARB's Monetary Policy Committee (MPC) meeting in January 2018.
FNB chief economist, Mamello Matikinca said, "The SARB’s decision to keep rates on hold comes as little surprise given the persistent upside risks to the inflation outlook. While we expect inflation to continue to moderate - we expect inflation to ease towards the mid-point of the Reserve Bank’s target band by early next year".
Cosatu views SARB's Monetary Policy Committee decision as a missed opportunity.
Cosatu's statement released on Thursday said, "With so many people losing their jobs every day, some struggling with massive debts and with economy on its knees; a cut of the repo rate even by 25 basis point will have gone a long way to initiate some positive economic sentiment".
The National African Federated Chamber of Commerce and Industry (Nafcoc) has also expressed its position regarding SARB's decision. "This is once again an affirmation that South African economic fundamentals are sound," Nafcoc statement read.
The SARB's MPC decision on interest rate comes at a time of credit ratings review season.
- BUSINESS REPORT ONLINE