Repo Rate Unchanged

Repo Rate Remains the Same

The Repo Rate (set by the SA Reserve Bank) affects the rates that banks and other credit providers can charge consumers as a maximum (they mostly charge the maximum don’t they?).

This month saw the latest announcement from the SARB Monetary Policy Committee as to whether this rate would stay the same or possibly even drop, as many people hoped.

 

Positive Factors Not Enough

The Rand has been doing well and inflation is within the targeted zone (sitting at 4.8% at present) which lead some economists to think that consumers may be in for a small rate reduction (once again). This would have seen the rate drop to 6.50%, for example. Sadly the Monetary Policy Committee decided to err on the side of caution, citing reasons like political instability and the danger of sovereign debt ratings dropping (from agencies like Moodeys) and a possible huge hike in electricity costs coming.

The Committee itself had to debate the decision for some time as the 6 members were split 3 in favour of a drop and 3 in favour of it remaining the same. In the end, caution won out. The rate remains unchanged at 6.75% as do all the other rates which are based on this rate (like the one you pay on your credit card or homeloan).

 

 

 

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