Repo rates remain the same

by | May 21, 2021 | Personal Finance

The South African Reserve Bank’s Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 3.5%.

In a statement on Thursday afternoon (20 May) the Reserve Bank governor Lesetja Kganyago  announced that the South African Reserve Bank’s Monetary Policy Committee (MPC)  has decided to keep the repo rate unchanged at 3.5%. He noted that the decision was unanimous, given a ‘balanced’ economic outlook and inflation forecast.

Governor Kganyago said that the steady rate of vaccination in many has lifted projections for global economic growth and significantly boosted confidence. He did however point out that the rate of vaccination amongst countries was not uniform, and that many emerging countries were lagging behind. 

 “Until vaccination is widespread and populations develop sufficient immunity to curb virus transmission, it is expected that waves of infection will continue.”

The economy is expected to grow by 4.2% in 2021 (up from 3.8%), he said. “The stronger growth forecast for 2021 reflects better sectoral growth performances and a more robust terms of trade in the first quarter of this year.”

Despite the more optimistic outlook, households remain under pressure, and getting back to pre-pandemic levels will take time, Kganyago said.

Headline consumer price inflation averaged 3.3% in 2020. The forecast for 2021 is slightly lower at 4.2% (down from 4.3%) and for 2022 and 2023 unchanged at 4.4% and 4.5%, respectively.

At a global level, a wide range of prices is accelerating, from raw materials to intermediate inputs to food, reflecting both global supply shortages and rising demand. Locally, a stronger exchange rate, ongoing moderation in unit labour costs, and sustained economic slack are expected to offset higher electricity and food price inflation, keeping the headline inflation forecast relatively stable.

Some economists believe there is room for the Reserve Bank to cut rates by 25 or 50 basis points. However,  they largely expect rates to hike only in the first quarter of 2022 again.

It is vitally important that consumers use 2021 to get their finances under control before the expected rates hike in 2022. With many consumers still not back to their  pre- Covid household levels of income, it is imperative that consumers get their expenditure and debt under control.

Sebastien Alexanderson, CEO of National Debt Advisors – SA’s leading debt review company  – has encouraged consumers to seek out the services of a registered debt counsellor. He has however cautioned them to be on the look out for red flags.

 “With over 2000 NCR registered debt counsellors it’s hard to know where to go. Luckily most of these debt counsellors will work within a larger practice or company. With the help of social media or perhaps a rating engine like Hello Peter,  you can do a bit of investigative work and decide on your best options. 

 The most important tip I can give someone who is looking for a debt counsellor is: make sure they can solve your debt in 5 years or less using DCRS (Debt Counselling Rules System). 

This normally gives the debt counsellor  the ability to negotiate the lowest interest rates, but it also requests that the customer make maximum contribution,  in order to get out of debt sooner. Too many times I’ve had clients call me saying another debt counsellor just offered them half what we had negotiated. When I have a look, I normally see that it will take them 12 years to be debt free instead of 5 years  Apply your mind and try to be debt free in 3 years or less by working with your debt counsellor  to pay off as much as you can, when you can. NDA is the number one debt counselling company in SA for a reason – and that is because we care committed to getting you debt free, in as short a time and with as little hassle as possible. 

For a free debt assessment – contact NDA today

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