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Financial News

The SA Reserve Bank’s Monetary Policy Committee (MPC) decided to put up the Repo Rate by 25 basis points in January 2023.

Many had expected a slightly larger increase of 50 basis points due to inflation remaining high and the rand dollar and Eskom etc, etc. So, the slightly lower increase is the best that could be hoped for.

Consumers with debts are very aware of how the repo rate has been bumped up and up since its pandemic low and how that impacts on how much interest they need to pay on their debt each month. People who, at the pandemic low repo rates, took a bond of R1 million are now probably paying around R2000 more than they were back then. The new 25 basis point rate hike means they will now pay an additional R200 extra each month.

Economists are hopeful though that we may be nearing the top end of the rate increase cycle. Many factors are involved but the core one being if the MPC see the inflation figures drop below 6%. If that happens, they may hold off on further rate increases.

In all likelihood there will be at least one more increase in the immediate months ahead and yes, more could follow but there are some reasons to be cautiously optimistic.