By: Natasha Archary
The South African Reserve Bank has announced a hike in the repo rate by 75 basis points from 6.25% to 7%.
This will be in effect from 25 November, with three members of the Monetary Policy Committee (MPC) in favour of the 75 basis points increase. Two other members of the MPC would have preferred a 50 basis point increase.
The 75 basis points hike pushes the prime lending rate up from 9.75% to 10.5%.
South African Reserve Bank Governor Lesetja Kganyago, made the announcement of the repo rate hike on Thursday, 24 November.
Kganyago said this is the first time the MPC has pushed the repo rate up to pre-pandemic levels.
“The bank’s forecast of headline inflation for this year and next is slightly higher at 6.7% and 5.4% respectively.”
The MPC decided to increase the repurchase rate by 75 basis points to 7%, with effect from the 25th of November 2022. Three members of the Committee preferred the announced increase. Two members preferred a 50 basis point increase. #SARBMPCNOV22
— SA Reserve Bank (@SAReserveBank) November 24, 2022
While Kganyago says the decision to take the repo rate up was necessary to manage inflation, the news has hit cash-strapped South Africans hard.
Many are now concerned they will be losing their homes as a majority of households are already struggling to keep up with monthly obligations.
An increase in the repo rate increases your instalment on your monthly bond. This will only put further pressure on homeowners who may default on their repayments and possibly lose their homes.
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