Interest rate hike: why it’s not all bad news

By Faeza
28 January 2016


It seems like yet another thing to feel depressed about – an increase in interest rates means higher home-loan repayments, car-loan  repayments… Pretty much anything related to credit that comes from an interest-bearing account.

South African Reserve Bank (Sarb) governor Lesetja Kganyago said the Sarb’s latest inflation forecast has deteriorated, mainly due to the exchange rate assumption and expected higher labour costs, he said at the end of the Sarb’s first monetary policy committee (MPC) meeting for the year.

The repo rate – the rate at which the Reserve Bank gives loans to banks that then loan money to us – is now at 6.75%. As a result the prime lending rate at which banks loan to us has increased to 10.25%.

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