Interest rates hiked by 25 basis points
Interest rates were hiked by 25 basis points on Thursday, as the Reserve Bank slashed its expectations for growth this year.
Three members of the monetary policy committee voted in favour of the 25 basis point hike, while two wanted a 50 basis point increase.
The move brings the repo rate to 7.25%, and the prime rate to 10.75%. Economists polled by Bloomberg expect that rates may peak at 7.5% and that the first cuts could come as early as the fourth quarter of the year.
The SA Reserve Bank hiked rates by 75 basis points for three meetings in a row last year.
On a new home loan of R2-million at the prime rate, the latest increase hikes the monthly instalment by around R340. Since November 2021, monthly payments on a R2-million home loan are R4 800 more expensive due to a raft of rate hikes.
On Thursday, Governor of the SA Reserve Bank, Lesetja Kganyago, was gloomy about the outlook for the South Africa's economy.
The Reserve Bank now expects the economy to only grow by 0.3% this year, due in part to loadshedding. As recently as November, it expected growth of more than 1% in 2023.
The bank also slashed growth expectations to 0.7% in 2024 (down from 1.4%) and by 1.0% in 2025 (down from 1.5%).
"While economic growth has been volatile for some time, prospects for growth appear even more uncertain than normal," Kganyago said.
He expects that investment will decline amid weaker confidence and lower expected growth, while declining commodity prices mean exports are also forecast to be less robust.
While the bank lowered its growth expectations, it kept its headline inflation for 2023 unchanged at 5.4% - still above its target goal of 4.5%. It only expects inflation to reach this goal at the end of 2024.
Comments
The
content
you are trying to access is only available to subscribers.
If you are already a subscriber, you can Login Here.
If you are not a subscriber, you can subscribe now, by selecting one of the below options.
For more information or assistance, please contact us at subscriptions@creamermedia.co.za.
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation