Repo Rate Predictions

Will the Repo Rate Go Up?

This week the Monetary Policy Committee (MPC) will me to discuss the Repo Rate (the rate that the SA Reserve Bank lend out money to other SA banks at – other interest from these various banks rates are linked to this repo rate. If it goes up you will pay more for your credit and if it goes down you pay less.) The question is will they put the rate up or not. There is little chance of it dropping at this point.

Slow Climb

Over the last few months (2 and half years almost) as the economy continues to be under strain with the worldwide economic recession, the interest rate has slowly been climbing. This has placed those with credit under ever increasing strain. Predictions now abound as to what the MPC will decide to do this week.

The MPC consider around 15 different economic factors when making their decision. At present market analysts say that of the +-15 only 2 point to a need for a hike in the rate. The stronger Rand also will play a big part in their decision, which most feel will be to leave things as they stand for now. The last two meetings of the MPC have left the Repo Rate stable at 7% in what is described as a hike pause.

It Will Go Up

Even though the current prediction is for the rate to stay the same, economists warn that it is realistic to expect at  least 2 more hikes probably in November 2016 and March next year (traditionally tough times for most consumers). The month of March traditionally has one of the higher number of average applications for debt help, through, by consumers. Such rate hikes at the time when consumers are finally coming to terms with (1) their end of year spending and (2) beginning of the year added costs could push even more people into the debt review process next year.