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Nedbank economist, Liandra da Silva, reckons that South Africans will likely see at least one more repo rate increase this year.
Speaking at the Nedbank Roundtable discussion held at the bank’s campuses on Monday, 20 February 2023, Da Silva said that the South African Reserve Bank – which hiked the repo rate quite aggressively in 2022, could likely increase it one more time this year by 25 basis points, before easing up again.
“With inflation close to 7%, the Reserve Bank will push through one more rate hike,” she said.
Da Silva said that after this, the repo rate will probably remain in this range.
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This is bad news for South Africans, who were hoping that the hikes would cease after the last one in January this year, when Reserve Bank Governor Lesetja Kganyago delivered the first monetary policy committee (MPC) decision for the year. It was the eighth consecutive increase since policy normalisation started in November 2021.
The repo rate is currently at 7.25%, making the prime lending rate in the country at 10.75%.
Last year, the SA Reserve Bank hiked rates by 75 basis points over three consecutive meetings.
The MPC meets every second month to assess the interest rate and is due to meet again in March.
Meanwhile, the country waits with bated breath to hear the outcome of the national budget speech set to happen on Wednesday, 23 February 2023.
With the president officially declaring a national state of disaster over the country’s energy crisis, South Africans are eager to see the allocation of funds from the fiscus to this, hoping for avenues of financial reprieve through government’s efforts.
ALSO READ: 2023 Budget: SMEs need fundamental, large-scale interventions
Nedbank’s Mark Boshoff said that while the declaration of a state of disaster does imply that new arrangements would be made around funding and loans to help businesses through the energy crisis, the banks do not yet know what those arrangements will entail until the announcement on Wednesday.
When a state of disaster is declared, the government is granted additional powers to address the crisis with fewer bureaucratic hurdles, regulations, and more funds.
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