Cape Town – On the eve eve of Black Friday, which heralds the start of the Christmas shopping season, South African consumers were dealt another blow as interest rates were hiked for the eighth time this year.
Lesetja Kganyago, South Africa's central bank governor, announced the latest decision on interest rates when the South African Reserve Bank’s Monetary Policy Committee (MPC) met for the last time this year.
Kganyago said the repo rate would increase by 75 basis points, taking it from 6.25% to 7%.
This means the prime lending rate will increase from 9.75% to 10.50%.
Kganyago said two members of the MPC preferred an increase of 50 basis points, while three others preferred the increase of 75 basis points.
Lew Geffen Sotheby’s International Realty chief executive Yael Geffen said both property owners and consumers face a bleak festive season and an even bleaker start to the new year.
“The latest rate hike means home owners with bonds of R2 million – which in today’s market isn’t by any stretch big – will have seen an increase of nearly R4 500 in their monthly repayments in one year.
“The government surely can’t believe that salary-earning South Africans can afford increases in that range in the space of 12 months, on top of headline inflation going through the roof?
“If there ever was a time for a hard-line economic turnaround strategy, it’s now, because the long-term plans rolled out so far haven’t produced much for South Africans on the ground, except for longer periods of load shedding.”
A slight silver lining is in store for motorists as lower international oil prices, along with a strengthening rand, means that the price of petrol is not expected to increase by more than R1, while economists are expecting a significant cut in the price of diesel at the pump.