Most economists expect the Monetary Policy Committee (MPC) of Reserve Bank to hike the repo rate when it meets this week.
This on the back of rising global interest rates, especially in the United States as well as expected higher inflation going forward.
It will be a tough decision for the Reserve Bank balancing interest rates in a low growth environment but also against the backdrop of rising interest rates globally.
South Africa cannot afford to not move with the global trend in rate hikes as this could result in capital outflows.
This will however be bad news for highly indebted consumers as a hike would mean they pay more interest on their debt.
But for those with investments or savings, it means they get more interest on their money.
Wits University Professor Jannie Rossouw says:”My expectation is that the repo rate will be increased by 25 basis points, as close as possible to the midpoint.”
The Reserve Bank’s decision would also be based on the inflation outlook.
It’s expected to rise in the coming months. The MPC will meet from Tuesday and will make the announcement on Thursday.
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