To curb inflation, the South African Reserve Bank (Sarb) has raised interest rates by 4.75% to a 14-year high of 8.25%. Following the various shocks our economy faced throughout Covid-19, inflation breached the upper limit of the Sarb’s target range for 13 consecutive months, leading to the central bank tightening monetary policy since November 2021. While inflation has since eased – to an annualised 5.
4% in September 2023 – rates remain at their highest since 2009, prompting many to criticise the Sarb for its approach. Some even believe the biggest obstacle to growth and job creation in the short term is the Sarb’s obsession with inflation targeting; we tend to agree. ADVERTISEMENT CONTINUE READING BELOW Traditionally, real interest rates around 2% are best for long-term sustainable growth, which means that there is a lot of room for the Sarb to cut interest rates and support struggling South African consumers. The central bank’s scope to lower borrowing costs may also improve as its counterpart in the US, the Federal Reserve, potentially nears the end of its rate hiking cycl
Source: Loan Digest (loandigest.net)
South African Reserve Bank Interest Rates Inflation Monetary Policy Growth Job Creation Consumers
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