Research

Further Interest Rates Hikes

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) raised the key monetary policy interest rate – the repurchase, or repo rate – by a further 25 basis points from 6,75% to 7% per annum. Based on this hike in the repo rate (the rate at which commercial banks borrow funds from the Reserve Bank), Absa announced that its prime lending and variable mortgage interest rates will rise from 10,25% to 10,5% per annum, effective from 18 March 2016.

Lending rates have risen by a cumulative 200 basis points since the start of 2014 and by 75 basis points since January this year. The further hike in interest rates came against the background of still mounting inflationary pressures, driven by factors such as the rand exchange rate, food prices, electricity tariffs and oil and fuel prices. In view of trends in and the outlook for inflation, the forecast is for interest rates to rise further towards the end of 2016.

Read more here: Interest Rates (25bps hike 17Mar16)