Repo rate cut too little too late, says analyst
Debt Rescue’s Annaline van der Poel said that while any relief is welcome, this small cut will barely affect the over 55% of the population living in poverty, or the middle class already crushed by debt.
FILE: South African Reserve Bank. Picture: supplied
JOHANNESBURG - Some analysts say the South African Reserve Bank (SARB)'s 25 basis point repo rate cut is too little too late for struggling South Africans.
Thursday saw the first cut in four years, bringing it down from a 15-year high of 8.25%.
READ: SARB's MPC announces first repo rate cut in 4 years
The SARB's governor, Lesetja Kganyago, cited an inflation drop to 4.4% as a key reason for the decision.
Some experts argue the move won’t go far enough to help ordinary citizens.
Debt Rescue’s Annaline van der Poel said that while any relief is welcome, this small cut will barely affect the over 55% of the population living in poverty, or the middle class already crushed by debt.
“The reserve bank governor’s recent repo rate cut may seem like a relief, but for many South Africans, it feels too little too late. Inflation has stabilised but the aftereffects of a long period of high inflation are still deeply impacting the cost of living.
“Households are grappling with elevated prices for essential goods and services making it tough to manage their budgets. Many are resorting to buying food and other essentials on credit because they simply don’t have enough to pay for the outright.”
Furthermore, van der Poel cautioned that South Africans had reached a financial breaking point, with many left with no options predicting further hardships for citizens if interest rates remain elevated.
“While lowering interest rates might ease borrowing costs slightly, it doesn’t provide the necessary financial relief for those who are over-indebted. Additionally, we need to address our very high unemployment rate to ensure more households can feed their families and become economically active.”