Expert cautions against overspending following repo rate cut

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Economist George Glynos has cautioned consumers not to become complacent and take it for granted that more interest rate cuts are on the cards soon.

Overly indebted households will get slight relief after the Reserve Bank cut interest rates by 25 basis points.

That has taken the repo rate, at which the Reserve Bank lends to commercial banks to 6.5%.

This has taken the prime rate to 10% with effect from Thursday.

The combination of a firmer rand and the expected stability prompted Wednesday’s rate cut.

“The main point to make here, and it is something that all South Africans must just heed, is the fact that we shouldn’t take it for granted that just because they’ve cut once, they are going to cut two or three more times. I think this is going to be a very, very shallow rate cut cycle. As a result of that, we need to continue behave very cautiously in dealing with our financial affairs and not use this as a green light to ramp up any fresh levels of debt ” adds Glynos.

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