More suffering for South Africans as interest rates hiked again

South Africans will now be paying even more to settle their loans.

Repo rate increases

The repo rate has increased from 7% to 7.25%, which means the prime rate is now 10.75%.

Reserve Bank governor Lesetja Kganyago announced this while delivering the Monetary Policy Committee’s (MPC’s) statement on Thursday afternoon.

The Bank’s MPC decided to increase the repurchase rate by 25 basis points to 7.25% per year. This will take effect from 27 January.

The increase in the interest rate is at least smaller than the previous three hikes in South Africa, which were all by 75 basis points.

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Load shedding and inflation

He said because of load shedding and other logistical constraints, the Reserve Bank now forecasts GDP growth of only 0.3% in 2023.

Kganyago said high inflation and weak economic growth continue to shape global conditions.

He said as Russia’s war in Ukraine drags on, recession risks lurk in Europe, despite energy constraints easing.

The Reserve Bank governor also said growth is expected to be lower in the United States this year, while China’s growth is likely to be modest.

“In the developing world, a number of economies face debt distress, exacerbated by tighter global financial conditions,” he said.

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