Following the South African Reserve Bank’s decision earlier today to leave its benchmark repo rate unchanged, FNB confirms it will maintain its prime rate at existing levels and will review this position after the next SARB MPC meeting in January 2024.
FNB CEO Jacques Celliers says, “While many factors indicated the possibility of a rate hike today, the Reserve Bank’s decision to hold their key lending rate provides some relief after a challenging year. However, the Bank’s decision aligns with traditionally high spending during Black Friday and the holiday season.”
“I urge consumers to keep an eye on their financial needs in January next year as we go into this higher spending period. With inflation now stabilising and even declining around the world, consumers and businesses should be aware that salary adjustments will follow a similar pattern. The prospect of lower rates in 2024 should not generate a strong reaction from borrowers,” adds Celliers.
FNB Chief Economist Mamello Matikinca-Ngwenya says, “Today’s decision comes as expected. Global activity has weakened following the post-pandemic cyclical recovery and, while inflation remains sticky, it is slowing. In line with this, central banks in major economies have also paused interest rate hiking cycles.
“Locally, lower fuel prices should support slower headline inflation before year-end, pushing real interest rates higher. More importantly, core inflation remains weak despite higher import and electricity costs, highlighting constrained consumer demand which has extended to property and vehicles.
“While funding risks remain elevated, the more positive market reaction to the Medium-Term Budget Policy Statement (MTBPS) and a subsequently improved rand-dollar exchange rate would have provided further cause for the MPC to stay put.
“That said, we are not surprised that, like the Fed, the MPC maintained a hawkish tone. Such a tone may be key in containing inflation expectations and financial conditions while the impact of an aggressive hiking cycle takes the intended toll on economic activity.”
Celliers concludes; “I would like to thank our FNB customers for their support during the past year and extend our best wishes to all for the upcoming holiday season.”