DStv Channel 403 Saturday, 21 December 2024

Interest Rates | Inflation eases but another rate hike likely

JOHANNESBURG - Consumers are bracing themselves for another interest rate hike.

Despite an ease in inflation, economists are largely expecting the Reserve Bank to hike rates.

READ: Inflation eases to an 11-month low

But they remain divided on whether rates will rise by 25 or 50 basis points.

Prices in this basket have risen the fastest since 2009.

It's called inflation – with food prices rising by an unbearable rate of 14-percent.

Your rand is buying you less – not just in a grocery store – but beyond. And that’s where the Reserve Bank comes in…

Its prime mandate is to stabIlise the rand’s purchasing power and one way it does that is by hiking rates when inflation threatens to run away.

Since November 2021 its pushed up interest rates consecutively every two months, taking the prime rate to 11.25-percent from 7-percent.

Reserve Bank and Governor Lesetja Kganyago warns of a bigger calamity if it abandons its mandate to protect the rand.

Momentum economist Sanisha Packirisamy said, "those with home, vehicle and other loan repayments are stretched far beyond they imagined when rates were at are their lowest in that year."

One economist says the hikes are doing far more harm than good. He says government should fight inflation by offering subsidies to the poor – like some countries in Europe are doing.  

Duma Gqubule said, "inflation is showing signs of easing, coming in this week at 6-point-5 percent from 7-point-1 percent.

That may see the Reserve Bank to come in with a smaller 25-basis point hike.

Paid Content