This follows after the South African Reserve Bank (Sarb) governor, Lesetja Kganyago, this afternoon announced the bank will leave the repo rate unchanged at 7%. The prime lending rate, the figure charged by banks to customers, will remain at 10.5%. 

Stofberg says this is likely due to the fact that inflation has been steadily increasing, leading the Reserve Bank to consider ways to achieve price stability. With the GDP also under pressure, Stofberg says it makes sense that the Bank would not increase the repo rate.

“And the final nail in the coffin was likely the decision by the Federal Reserve in the US to also not increase interest rates. So, in the global environment of lower rates that keep on remaining low, it’s not necessary to put your economy through the strain of increasing interest rates. So, I think they definitely made the right decision – keeping rates unchanged and having the consumer in South Africa breathe a sigh of relief,” Stofberg added.

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