The Repo Rate stays unchanged

Update Repo Rate 2024: 8.25%

The repo rate in South Africa has fluctuated since 2017, influenced by economic conditions and inflation. It saw a significant drop to an all-time low of 3.50% in October 2021 to mitigate the economic impact of the pandemic. 

However, it has been increasing since then to counter inflationary pressures, reaching 8.25% by February 2024. This historical trend reflects the South African Reserve Bank's efforts to balance economic growth and inflation. 

For those with loans or mortgages, higher rates mean higher repayments. For the economy, a high repo rate can slow down economic growth.

2017: Repo rate remains unchanged at 6.75%.

The weak economic growth and conciliated inflation, as well as the worldwide economic backdrop has led many economists to the opinion that the repo rate would drop yet again this month. Furthermore, the South African Reserve Bank is expected to make interest rate cuts in the near future.

Needless to say, interest rates cuts are done to stimulate the economy. It is no public secret the South African economy has not been growing as the country would like it to be.

How does the change affect the economy?

Although there are various ways in which the policy rate changes can be transmitted through the economy, the bank lending rate is the vital one in this instance. Incidentally, banks do not always pass on the rate cuts to consumers thereby rendering a policy driven monetary easing somewhat ineffective.

However, if the interest rate cuts had become successful the lending and spending would be boosted. For instance, a reduction in the interest rate implies that the commercial banks can borrow more money from the SARB at a less expensive interest rate.

The decrease in the lending rate could afford consumers a chance to get more financing. A prime rule is you really shouldn’t be taking out anymore loans. That is if you are already over indebted or cannot afford to take out more credit.