Reserve Bank keeps rates steady as consumers wait for relief

SOUTH Africans hoping for a drop in their loan repayments will have to wait a little longer.

- ASHLEY LECHMAN

The South African Reserve Bank's (Sarb) Monetary Policy Committee (MPC) decided this week to keep the repurchase rate unchanged at 7%, which leaves the prime lending rate steady at 10.50%.

The decision means there will be no immediate relief for households already stretched by high borrowing costs.

Monthly instalments on mortgages, car loans and other credit linked to prime remain at elevated levels, tightening the squeeze on disposable income.

This means that a R1 million bond taken over 20 years at the current prime rate still costs about R9 984 a month.

With the Sarb choosing not to cut, that figure remains unchanged. A R2 million bond remains close to R19 968 a month, with no savings passed on to consumers.

Shoppers had hoped easing inflation, now closer to the bottom end of the Sarb's 3 to 6% target band would convince the bank to trim rates and provide breathing room.

Instead, the committee opted for caution, pointing to global uncertainty and the need to keep inflation expectations firmly anchored. Economists note that while the pause may disappoint indebted households, it also signals the Sarb is wary of moving too fast in a fragile economic environment.