South Africans will have to hold their breath this week as they prepare for a possible interest rate hike again.
The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) will meet this week and make a decision on the interest rate on Thursday, November 23.
It should be noted that this will thankfully be the last meeting and decision for 2023.
The MPC has kept the repo rate at 8.25% for the last two meetings.
Nedbank said on Monday that it believes that the SARB will most likely hold the interest rate steady for a third consecutive time.
“Inflation edged slightly higher in September after sliding to a two-year low of 4.7% in July, with the upside stemming from fading base effects and higher fuel costs as oil prices spiked and the rand remained weak,” according to Nedbank.
The bank said that core inflation is trending in line with the SARB's 4.5% target.
“Despite some upside risks to the outlook, the underlying environment has become more supportive of lower domestic inflation in the months ahead. Consequently, we expect no further rate hikes for this year, with the repo rate staying at 8.25% and the prime lending rate at 10.75%.”
IMPACT OF AN INTEREST RATE HIKE ON YOUR HOME LOAN
Those who monitor the interest rate hike know that it impacts your loans most ardently.
The impact of it on your home loan is something most South Africans look at.
Grant Smee, CEO of Leadhome, said that if the SARB increased the repo rate by another 0.5%, for example, on a R2 million bond, it would mean an additional R630 to their monthly instalment.
October’s consumer inflation numbers will also be released this week, and Nedbank said that they “expect consumer inflation to remain steady at 5.4%”.
“During the month, consumer prices are expected to have increased by 0.4%, with the upward pressure again emanating primarily from fuel prices. However, the rise in the petrol price eased to 4.6% from September’s 7.5% as the price of Brent crude oil edged lower on fading supply concerns.“