An outside view of the South African Reserve Bank in Pretoria. Photo: Bongani Shilubane/African News Agency (ANA)
JOHANNESBURG – South African indebted households are set for more financial pain after the South African Reserve Bank today raised interest rates by 25 basis points to 6.75 percent.
The central bank said the domestic growth outlook remains challenging.
“Recent monthly data on economic performance in key sectors suggests a more moderate recovery in growth in the third quarter than expected in September,” Governor Lesetja Kganyago says.
The central bank now forecasts growth in 2018 to average 0.6 percent (down from 0.7 percent in September). The forecast for 2019 and 2020 is unchanged at 1.9 percent and 2 percent respectively.
October’s inflation print on Wednesday came in at of 5.1 percent in October, slightly higher than September’s 4.9%
Andrew Golding, chief executive of the Pam Golding says there are still inflation risks which may incline the reserve bank towards continuing on a modest hiking cycle in the New Year.
“It would thus be wise for home buyers – particularly first-time purchasers –to factor this in along with the other costs associated with acquiring residential property,” Golding says.