Chief economist at Econometrix Azar Jammine says these are the toughest economic times that consumers have dealt with since the COVID-19 stringent lockdown restrictions were implemented.
His statement comes ahead of the South African Reserve Bank (SARB)’s Monetary Policy Committee’s (MPC) expected announcement to raise interest rates, possibly by 25 or 50 basis points on Thursday afternoon.
Jammine says Eskom’s rolling blackouts have made life even tougher.
“On top of that, you’ve got this intensified load shedding, which on its own is probably the most damaging source of downward pressure on economic growth in the country. So, unfortunately in the short-term, people have to go through very tough times,” adds Jammine.
Another economist has warned that if inflationary pressures mount, the Reserve Bank may continue on its interest rate hike path.
Chief Economist at Investec, Annabel Bishop says, “Our expectation is that the South African Reserve Bank will raise interest rates by half a percent, and that will likely be the last interest rate boot this year. However, the outlook is still uncertain, and of course, much will depend on how quickly inflation falls. If inflation shows, it’s going to come off fairly rapidly.”
She adds: “Then we should, as I said, have reached the last interest rate hike in January. However, if we start to see inflationary pressures rise up again, this would concern the Reserve Bank, and it may look to hike further down the line.”
Reserve Bank expected to raise interest rates: