Following the South African Reserve Bank’s (SARB’s) decision to increase its repo rate by 0.75%, FNB will raise its prime lending rate by 0.75%. The prime rate-linked interest rates will be adjusted from Friday 23 September 2022.
Jacques Celliers, FNB CEO, says, “We are witnessing a concerted effort by the South African Reserve Bank and numerous other central banks around the world to mitigate the effects of higher inflation.
“Although the effects of these actions may appear to be negative for consumers, the effects of escalating inflation are significantly more severe. This is an ideal time for consumers and businesses to take advantage of higher investment rates and minimise consumption-driven credit usage.
“The recent FNB/BER Consumer Confidence Index revealed a slight increase in consumer confidence in South Africa, and consumers have also experienced some relief due to decreases in fuel prices.
“However, South Africa must act swiftly to address issues such as the intermittent power supply, which continues to derail the country’s economic growth prospects.”
Mamello Matikinca-Ngwenya, FNB Chief Economist, says, “As expected, the Monetary Policy Committee (MPC) continued with aggressive policy rate hikes, increasing the repo rate by 75bps (for the second time) to 6.25%.
“This was in line with our and the Bloomberg consensus expectations. The aggressive rate increase came despite the economy declining by 0.7% q/q in 2Q22 and reflects the MPC’s drive to contain inflation expectations over the medium-term.
“We expect the Reserve Bank to increase the repo rate by 50bps at the November MPC meeting, pushing it to 6.75%, the level where we think the policy rate will peak before falling in early 2024.
“The continuation of aggressive rate increases is partly underpinned by aggressively tightening global financial conditions, the weaker domestic currency and domestic wage pressures as workers demand higher wages to compensate for the higher cost of living.”