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Latest repo rate predictions in South Africa

On 18 July 2024, The South African Reserve Bank (The SARB's) Monetary Policy Committee (MPC's) Governor Lesetja Kganyago addressed South Africa about their decision regarding the repo rate. Although it was a split decision, they decided to keep the repo rate unchanged. The new repo rate remains unchanged at 8.25%.

The repo rate has a direct impact on you

When the repo rate goes up, down or remains unchanged, this affects the prime lending rate of the banks too. The prime lending rate is the minimum rate at which the banks lend money to consumers. 

This means that your loan monthly repayments are directly impacted by the decision of the repo rate. 

South African interest rate forecasts for 2024

Since this latest hold of the repo rate, many economists are predicting a cut in either September or November 2024.

What is inflation?

Inflation, broadly, is the increase of the price of good and services, causing the value of the Rand to decrease. STATS SA reported a consecutive second month decline with inflation, coming down from 5.3% in March to 5.2% in April. Food inflation generally slowed down, while fruits and hot beverages increased. And to protect the value of the Rand, The SARB attempts to control interest rates with inflation targeting models as was explained earlier in this blog post.

The SARB uses inflation targeting to control the repo rate

The South African Reserve Bank (SARB) uses inflation targeting as a key tool in its monetary policy framework to determine short-term interest rates. Inflation targeting involves setting a target range for inflation and this is what the SARB uses to keep inflation rates stable and predictable. For the SARB, the target range for inflation is set between 3% and 6%, with a specific aim for inflation to be at 4.5%.

By setting a target range for inflation, the SARB can adjust interest rates in response to changes in inflation levels in order to achieve its target. If inflation is above the target range, the SARB may increase interest rates in an attempt to curb inflationary pressures. And if inflation is below the target range, the SARB may lower interest rates to encourage economic growth and increase inflation. This was the case during COVID-19 which saw dramatic cuts to the interest rate.

Inflation forecast for the rest of 2024

In the MPC's statement in March 2024, they stated that while inflation expectations have moderated, 'two year ahead expectations are still in the top half of our target range'.

What can you do with high interest rates?

Already squeezed consumers are battling to keep up with high interest rates, and this hold, will just extend the time they have to bear the cost of these high interest rates. If you are struggling and simply unable to keep up with your home or car loan repayments because of these high interest rates, know this:

  1. You are not alone. Right now, the middle-class is battling to keep up with the cost of living. With almost 80% of their salary going towards financing debt. 

Read: The Middle-Class is collapsing under debt

     2. There is a way out with debt review at Meerkat. 

How can debt review can help you with high interest rates?

We consolidate all your debt into one, reduced monthly repayment. This can include your home loan and car loan. You can end up saving up to 50% on your monthly debt repayments. Not only do you not have to worry about debt collectors harassing you over the phone, you also don't have to worry about losing your home. We negotiate on your behalf with your creditors to reduce interest rates on your loans. This means you could end up saving on your original debt amount too!

And, these new interest rates will remain FIXED throughout your debt review process. This means you won't be affected by potential future interest rate hikes.

So while we cannot control the decision of the MPC to reduce interest rates, we can control whether or not your monthly debt repayment is reduced regardless. 

Let us contact you about debt review today!

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Who is Meerkat?

Meerkat is a financial wellness company, committed to helping South Africans do MORE with their money. We do this by helping you with your debt repayments, affordable funeral cover, credit life cover and kick-starting an emergency savings fund!

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