The Reserve Bank slashed its expectations for growth this year. | News24_Business
Interest rates were hiked by 25 basis points on Thursday, as the Reserve Bank slashed its expectations for growth this year.
Three members of the monetary policy committee voted in favour of the 25 basis point hike, while two wanted a 50 basis point increase. The move brings the repo rate to 7.25%, and the prime rate to 10.75%. Economists polled by Bloomberg expect that rates may peak at 7.5% and that the first cuts could come as early as the fourth quarter of the year. On a new home loan of R2 million at the prime rate, the latest increase hikes the monthly instalment by around R340. Since November 2021, monthly payments on a R2 million home loan are R4 800 more expensive due to a raft of rate hikes.
On Thursday, Governor of the SA Reserve Bank, Lesetja Kganyago, was gloomy about the outlook for the South Africa's economy. The Reserve Bank now expects the economy to only grow by 0.3% this year, due in part to load shedding. As recently as November, it expected growth of more than 1% in 2023.
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