The Monetary Policy Committee (MPC) of the Reserve Bank has once again decided to leave South Africa’s repo rate unchanged at 6,75% and prime interest rate the same at 10,25%.
“This is very positive news for consumers as it means no increases in home loan and car instalments or personal loan, credit card and store account repayments until at least after the General Election in May,” says Rudi Botha, CEO of SA’s leading bond originator BetterBond*.
The decision follows news this week that the consumer inflation rate is currently holding at much lower levels than in 2018 (4,1% in February) despite the recent fuel price increases, and that employment increased by 158 000 or 1,6% year-on-year between December 2017 and December 2018.
“In addition, the economy grew by 1,4% in the fourth quarter of 2018 and 0,8% in 2018, and the Bank is hoping this trend will continue, resulting in GDP growth for 2019 of 1,3%,” he notes.
“However, household expenditure is currently declining, so static interest rates are needed to support growth - and will also offset the pressure on households resulting from the further fuel price and levy increases expected this year, and the 9,4% hike in electricity tariffs which Nersa recently granted to Eskom.