What the SA Reserve Bank interest rate cut means for consumers

SOUTH African consumers cheered as the South African Reserve Bank (SARB) cut the interest rate this past week, however, a wider view shows that the relief could be undone by other costs increasing.

- ASHLEY LECHΜΑΝ [e-mail]

SARB Governor Lesetja Kganyago decreased the repurchase (repo) rate for the country by 25 basis points, dropping it from 7.50% to 7.25%, effectively taking the prime lending rate to the country to 10.75%, from 11%.

Hayley Parry, Money Coach and Facilitator at 1Life’s Truth About Money told Business Report that the cut could not have come at a better time.

Parry said: “What that means is that, for anyone paying back any debt, you are going to be able to save on your debt repayment.

“For example, for every million rand you have in a home loan, for instance, you are now going to be paying R515 less a month at this new interest rate, thanks to the reduction in the interest rate.”

“It could not come at a better time because there has been a lot of pressure on South African consumers, with increasing electricity prices kicking in.

“This is great news for anyone who has been feeling the pinch and been struggling to make ends meet. Hopefully, this is going to provide a little bit of breathing room.