CAPE TOWN - The decision by the South African Reserve Bank to raise the repo rate will be hard-felt by consumers, most of whom are already struggling to make ends meet, a financial service provider said on Friday.
South Africa's central bank on Thursday raised the benchmark repo rate by 25 basis points from 6.5 percent to 6.75 percent, despite weak economic growth, saying delaying the adjustment could cause inflation expectations to become entrenched at higher levels.
The repo rate is the benchmark interest rate at which the central bank lends money to commercial banks. Changes in the repo rate affect the prime rate at which commercial banks in turn lend to consumers, which has also gone up to 10.25 percent.
“The announcement should already caution consumers on overspending ahead of the festive season," said Danny Zandamela, chief executive at Ithala, a financial service and credit provider based in KwaZulu Natal.
"After working hard all year to keep your finances afloat and credit rating intact, it is advisable to continue exercising financial discipline as times get tougher."