The South African Reserve Bank kept the repo rate unchanged at 3.5% today.
While we hoped for a rate cut against the background of a lower than expected Consumer Price Index that was announced earlier this week, today’s announcement is still good news for workers who are struggling to keep their finances together after a particularly difficult year due to the Covid-19 pandemic.
The rate stayed put despite the effect of load-shedding, the large fiscal deficit and lockdown on the economy.
With many workers having lost incomes or received salary cuts, the unchanged interest rate will help make ends meet amidst reports of South Africans being unable to repay their debts or accumulating debt just to stay afloat.
We expect the Reserve Bank to wait for the tabling of the National Budget next month before further decisions on interest rates are taken. We hope for another cut of 25 basis points later in the year, especially if the growth impact for the year is large and consumer price inflation is contained.
UASA urges its members and all South Africans to keep a tight budget to be prepared for expenses such as school fees, uniforms, books, and stationary expenses this time of the year.
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