Reserve Bank to Hike up Repo Rate by 75 Basis Points to Put Brakes on Inflation, SA Horrified by Increase

• The South African Reserve Bank’s (SARB) will hike its interest rate by 75 basis points to brake inflation
• The SARB raised its lending rate by 200 basis points in this cycle and are expected to continue hiking the rates
• First-time homeowners who entered the market when rates were at an all-time low might be most affected

JOHANNESBURG - The South African Reserve Bank’s (SARB) key interest rate is expected to rise by 75 basis points next week, according to a Reuters poll. The increase is an attempt to brake inflation.

Economists recently predicted another 75 basis points to 6.25% at its meeting on Thursday, 22 September. As a result, the SARB raised its lending rate by 200 basis points in this cycle.

According to TimesLIVE, BNP Paribas’ Jeffrey Schultz said it expects the SARB to continue hiking the rates. He added that there is evidence that suggests broader price pressures will yield another hawkish statement.

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Schultz expects a higher peak of 7% in January 2023, with the risk of higher rates continuing next year. The country’s inflation is expected to average 6.7% above the SARB’s 3% to 6% comfort zone.

Schultz said higher labour costs and inflation could result in the rand being more vulnerable in the third quarter. Regional Chief Executive of RE/MAX Adrian Goslett told BusinessTech that first-time homeowners who entered the market when rates were at an all-time low might be most affected.

Goslett encourages first-time homeowners to do the necessary repayment calculations ahead of the next Monetary Policy Committee meeting to ensure they can afford the higher repayments.

South Africans horrified by hikes:

Nhlakanipho Chiliza said:

“It seems like the ANC government wants all the citizens to be bankrupt… As it stands people are heavily indebted and cannot afford basic services.”

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Tar Lamza Lamani posted:

“The richer are getting richer while the poor are getting poorer. That is how capitalism works raise tax hikes and sell state-owned enterprises.”

Manabeng Timothy Mashilo wrote:

“These people are running government like they are running private entities whose main role is to create wealth at the expense of the poor.”

July Sam Goje commented:

“Enough is enough! How are we expected to pay for this?”

Thulani Khwela added:

“Solution nationalize the reserve bank all our problems will be over, we’re being used by western powers to fund the war against Russia.”

South Africans paying R500 more for groceries, Briefly News readers share how much they spend per month

In a related matter, Briefly News also reported South Africans are spending at least R500 more on groceries every month compared to a year ago.

The Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) recently compiled a Household Affordability Index that shows 44 basic items increased.

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South Africans are paying almost 13% more for food, according to data from 44 supermarkets and 30 butcheries in Johannesburg, Durban, Cape Town, Pietermaritzburg and Springbok in the Northern Cape.

Source: Briefly News