The South African Reserve Bank’s Monetary Policy Committee decided to keep the Repo Rate unchanged at 7%, keeping the prime lending rate at 10.5%.
“We believe it to be an appropriate decision from an inflation point of view,” said John Loos, FNB household sector and property economist. “Consumer price inflation for June was indeed slightly above the 6.3% SARB upper target limit of its 3% to 6% target range, with a drought-driven food price inflation spike being the biggest single driver of CPI inflation. However, besides food price inflation being an area of inflation over which the SARB has no influence through monetary policy, this spike can be expected to pass through as the severe drought conditions lessen and as high base effects begin to impact on food’s year-on-year inflation rate. In addition, we have seen the rand behave slightly better in recent weeks, which improves the inflation outlook by lowering imported price inflation pressures.”
“While the latest inflation data showed a slight upward trend (up from 6.1% in May to 6.25%), there is no compelling case for a further rate hike right now. An upward rate adjustment would add to the already negative economic sentiment and will most certainly serve as a dampener on the economy and property market. Consumers are already burdened with rising prices and we are not seeing any overspending, so there is no real reason for a rate hike” – Samuel Seeff, Seeff chairman
“Affordability is already an issue for many consumers who want to buy property, but don’t meet the necessary qualifying criteria. An interest rate hike will further widen the gap between homeownership dreams and reality” – Adrian Goslett, RE/MAX of Southern Africa CEO and regional director
“Against the backdrop of a sharp spike in global political and economic uncertainty, including fallout from Brexit, comparably, South Africa’s outlook is encouraging. Just this week Bloomberg reported an inflow of investment of a record R85.7 billion in the country’s stocks and government bonds in June – a trend which has continued in July” – Dr Andrew Golding, CE of the Pam Golding Property Group