Consumers warned of possible steep interest rate hike later this year
Consumers could face a steep interest rate hike later this year, after Thursday’s decision to postpone it, analysts warn.
The Monetary Policy Committee (MPC) has kept the repo rate unchanged at 7%, leaving the prime lending rate at 10.5%.
Reserve Bank Governor Lesetja Kganyago says the decision comes amid extreme global economic uncertainty.
Kganyago warns that conflict in the Middle East will likely push headline inflation above 4% for the rest of the year.
However, some analysts argue that pausing now is a mistake.
Citi Bank Chief Economist, Gina Schoeman, says an immediate hike is necessary to protect the economy.
“We do think that a rate hike earlier rather than later would help to quell a lot of the inflation pressures that we’re seeing in this economy. I know rate hikes do hurt those holding credit. I know rate hikes hurt the economy through a higher cost of capital for investment. But to be honest, inflation hits more and we are very concerned about second round effects and underlying inflation at this point, particularly given what’s happened to the oil price and the volatility uncertainty in the Middle East.”
The MPC decided to keep the policy rate unchanged at 7%.#SARBMPCJuly2026 pic.twitter.com/mDrJZW2rIn
— SA Reserve Bank (@SAReserveBank) July 23, 2026
VIDEO | MPC decision on interest rates:
-Report by Nothando Magudulela