Consumers are waiting with bated breath for the South African Reserve Bank’s (SARB) Monetary Policy Committee’s (MPC) decision on the country’s interest rate which will be announced on Thursday.
SARB Governor Lesetja Kganyago is expected to announce whether the repurchase rate (repo rate) will be hiked, lowered or left unchanged.
The repo rate is currently at 8.25%, with the prime lending rate at 11.75%.
At the MPC’s last meeting in July, the rate was neither lifted nor dropped, as the slight easing of inflation allowed the SARB to keep the rate unchanged, albeit sitting at a high level.
This week, however, global financial markets await the decisions of the Federal Reserve Open Market Commission (FOMC) on its decision on interest rates in the US.
It was expected to have been announced last night.
The markets expect that the two central banks will keep rates unchanged, although some uncertainty and nervousness prevail.
Chris Harmse, a consulting economist of Sequoia Capital Management, said that if the FOMC raised its bank rate, the MPC would have no choice but to also increase the repo rate.
“The risk of a further depreciation of the rand may force the MPC to follow the FOMC closely,” Harmse added.
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