With repo rate decision looming, economist says a high interest rate not all doom & gloom

JOHANNESBURG - Some economists expect little reprieve for consumers on Thursday afternoon when the reserve bank announces the repo rate.

The Monetary Policy Committee met this week to weigh a number of economic factors in a bid to decide on the repo rate.

This includes inflation and inflation expectations.

Some European central banks have already cut rates and markets anticipate the US Federal Reserve to cut the fed rate in September.

Although the reserve bank does not explicitly follow the US Fed, it does take the rand exchange rate and inflationary impacts of a potentially depreciating local currency into account.

The Bureau for Economic Research believes the reserve bank will keep the repo rate at 8.25% this time around, with chances of a cut in September.

While cash-strapped consumers won’t breathe a sigh of relief yet, Wits Business School's Professor Jannie Rossouw says it's not all doom and gloom.

"High interest rates are very good for some people who save or who have savings at banks and high interest rates attract foreigners to invest in South Africa, so it just depends on which consumers you’re talking about."

The prime lending rate currently sits at 11.75%.