The South African Reserve Bank (SARB) will announce its decision on the repo rate on Thursday, 23 November 2023. This is the final interest rate announcement for 2023 and consumers will be hoping that SARB Governor, Lesetja Kganyago, will offer some relief in the form of a rate cut.
However, economists are not optimistic about the prospects of a lower interest rate, as inflation pressures and a weak rand continue to pose challenges for the SARB. The consensus among analysts is that the repo and prime interest rates will remain unchanged at 8.25% and 11.75%, respectively, until the second half of 2024.
The table below shows the interest rate decisions made by the MPC in 2023:
| Date | Repo Rate | Prime Rate | Change |
|---|---|---|---|
| 26 January | 7.25% | 10.75% | +0.25% |
| 30 March | 7.75% | 11.25% | +0.50% |
| 25 May | 8.25% | 11.75% | +0.50% |
| 20 July | 8.25% | 11.75% | 0.00% |
| 21 September | 8.25% | 11.75% | 0.00% |
| 23 November | ? | ? | ? |
The repo rate is the benchmark interest rate at which the SARB lends money to commercial banks, while the prime rate is the interest rate that banks charge their customers. The SARB has raised the repo rate by 1.25 percentage points since January 2023, in an attempt to curb inflation and protect the rand from external shocks.
How Does The SARB Decide Hike Or Cut Interest Rates?
The SARB’s Monetary Policy Committee (MPC) meets every two months to assess the economic outlook and decide on the appropriate monetary policy stance. The MPC considers various factors such as inflation, economic growth, exchange rates, and global economic conditions when making its decision. The SARB’s primary goal is to achieve price stability in the interest of sustainable and balanced economic growth. The SARB targets an inflation rate of between 3% and 6% per year, with a midpoint of 4.5%.
The SARB faces the difficult balancing act between supporting the economic recovery and maintaining price stability. While consumers and business owners will be hoping for a rate cut, the SARB is likely to adopt a cautious approach and keep the interest rates unchanged at this meeting. The SARB will also provide its updated projections for inflation, growth, and the exchange rate, as well as its guidance for future policy actions.
How Does The Interest Rate Affect A Home Loan?
| Bond Amount | Monthly Repayment at 11.75% | Monthly Repayment at 11.25% | Monthly Repayment at 12% |
|---|---|---|---|
| R 750 000 | R8,319 | R8,174 | R8,464 |
| R1 000 000 | R11,092 | R10,899 | R11,252 |
| R1 250 000 | R13,865 | R13,624 | R14,090 |
| R1 500 000 | R16,638 | R16,349 | R16,908 |
| R1 750 000 | R19,411 | R19,074 | R19,726 |
| R2 000 000 | R22,184 | R21,799 | R22,544 |
| R2 500 000 | R27,730 | R27,249 | R28,180 |
| R3 000 000 | R33,276 | R32,699 | R33,816 |
| R4 000 000 | R44,368 | R43,599 | R45,088 |
| R5 000 000 | R55,460 | R54,499 | R56,360 |
Looking for bank repo houses, interested in investing in real estate and keeping up to date on the property market?
Subscribe to our weekly newsletter. 🎯
Leave a Reply