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There's been a general sigh of relief and welcome as the South African Reserve Bank kept the repo rate unchanged at 8.25%.
Reserve Bank governor, Lesetja Kganyago, made the announcement on Thursday despite consumer price inflation reaching 5.9%, verging on the central bank's inflation target range of between 3% and 6%.
'"Higher inflation has generally resulted in elevated inflation expectations across markets, businesses, and households. Market-based expectations for inflation in 2023 are currently at 5.8%, while near-term break-even rates have dipped to 4.3%," Kganyago said.
He said medium and longer-term market expectations for inflation remain elevated.
Kganyago said the monetary policy committee, however, would like to see inflation expectations anchored at the mid-point of the inflation targeting range.
The Reserve Bank’s Monetary Policy Committee (MPC) has decided to keep the repurchase rate at its current level of 8.25% https://t.co/0YAx9BF4vD #RepoRate
— @SAgovnews (@SAgovnews) November 23, 2023
In welcoming the announcement, the Good Party said consumers continue to face increasingly difficult decisions around spending with the rising cost of living leaving most South Africans struggling for their basic survival.
Spokesperson, Brett Herron, said high interest rates, and the financial crunch, will no doubt also have an effect on spending during the coming festive season when, retailers, in particular small businesses, and our economy rely on a boost in sales.
Build One South Africa (BOSA) said increasing interest rates would have further tightened the financial noose around the necks of South African households.
"Given that inflation has sharply increased to 5.9% year-on-year, South Africans need assistance in lessening the burden of the exorbitant cost of living and high levels of personal and household debt," said Acting BOSA spokesperson, Roger Solomons.
It was also welcome news for the property sector, with Pam Golding Properties, saying it was "certainly good news for interest-rate-sensitive first-time buyers, whose applications (according to Ooba) continued to decline in October (2023) to 47.3% of Ooba's total mortgage applications".
Chief executive, Dr Andrew Golding, said the rising cost of living and series of interest rate hikes have weighed on local household incomes
"With price pressures easing and the prospect of interest rate cuts on the horizon - plus some easing of the severity of load shedding in recent months - this should go some way towards galvanising the local housing market in early 2024," he said.
