- The South African Reserve Bank has announced it will increase the prime lending rate banks charge to consumers and commercial businesses
- The central bank's governor Lesetja Kganyago noted the rate hike comes amid global and local inflation price increases
- South Africans broke out in a frenzy on social media to react to the announcement of the expected interest rate hike
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PRETORIA - South Africans should make do with the Reserve Bank's decision to hike the repo rate by another 25 basis points to 4 per cent, upping the prime lending rate to 7.5 per cent.
Four out of five members of the central bank's monetary policy committee on Thursday voted for the increase, News24 reported. What does this signal for ordinary citizens, who will have to accept the hike as the lowest possible?
Well, for a new application on a home loan of R2 million at the prime rate, the monthly payment will increase by around R300 following the rate hike. Over a full calendar year, this translates to R3 600 more.
The central bank resolved to hike rates again in November, with a 25 basis point increase to 7.25 per cent, after the prime lending rate went to 7 per cent last year from 10 per cent in 2019.
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Although it's no secret the economy is still labouring to recover, with the country having grappled with lockdown restrictions throughout 2021, the Reserve Bank is confronted by the rate of increase in prices over the last while.
Increasing global price trends
In a statement, Reserve Bank governor Lesetja Kganyago said the rate hike comes in light of more increased global and local inflation prices, BusinessTech reported. But that's not all, as Kganyago likewise stressed the risk of higher electricity prices on the heels of Eskom's application of a 20.5 per cent tariff hike.
"The suggested policy rate path of the Quarterly Projection Model (QPM) indicates incremental normalisation in the first quarter of this year going into the next two, based on the current inflation forecast," Kganyago said.
"A singular risk arises from the likelihood of a faster normalisation of global policy rates than is currently built into the forecast, which believes some rate hikes could come about around June," Kganyago added.
Panic breaks out online
There was an explosion of panic on social media as South Africans from various walks of life reacted to the announcement. Some locals anticipate higher petrol prices in the foreseeable future, while others blamed the ANC for the situation.
Briefly News takes a look at some of the scathing comments below.
@Yolanda Scott wrote:
"This government is really busy killing its citizens. This is not a First World country please have mercy on us we can't anymore."
@Johannes Matome said:
"How do you increase interest rates n still keep people under lockdown... This reserve bank is not keeping up with reality."
@Samantha Justine Friend added:
"So they take out a loan that isn't needed and yet again we sit with the consequences. They have absolutely no accountability."
Cornwall Hill College: SA responds to Kganyago at protest
Elsewhere, Briefly News previously reported that Kganyago put himself in the centre of the issues at Cornwall Hill College.
Kganyago stated that schools that were previously whites-only should employ more black educators, change admissions criteria and teach more African languages. The College was embroiled in matters concerning racism allegations.
Kganyago joined the fight against racism at the private school, attended by his daughter, as he participated in an anti-racism protest.
Source: Briefly News