The tenth consecutive hike is set for next week.

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The tenth consecutive hike is set for next week.

Next week is set to bring another interest rate hike making it harder for everyday South
Africans to make ends meet as monthly repayments would increase in line with the rate

Various analysts and researchers are pointing to another increase, making it the tenth
consecutive hike to the rate cycle, which began in November 2021.

Although there is still a slim chance the rate won’t change, as was the case last month,
nobody will truly know until the announcement is made.

On May 25, the Monetary Policy Committee (MPC) of the South African Reserve Bank
(SARB) is anticipated to make the following increase public.

In its latest Weekly Review, the Bureau for Economic Research said that it still suspects
the SARB to hike the repo rate by 25bps next week; however, a surprise 50 basis point
hike can not be ruled out, especially if the rand does not strengthen meaningfully.

The rand took a toll late last week following accusations by the US ambassador in
South Africa that South Africa sold arms to Russia – crushing investor sentiment and
bringing the rand to its lowest point in history.
Since then, the currency has still not recovered and remains bogged down by load
shedding and a poor reputation.

In March, the MPC surprised the market when it hiked the rate by 50 basis points,
increasing the repo rate to 7.75% and the prime lending rate to a 14-year high of

This had severe knock-on effects on cash-strapped South Africans, who were forced to
pay more on monthly instalments such as bonds and vehicle asset financing every

Another increase will probably put these people under even more financial strain.
As interest rates climb, credit has become much more of a burden for many consumers,
according to DebtBusters CEO Benay Sager.
For instance, according to Sager, the average bond rates rose from 8.3% to 11.4%
annually in a brief period after the most recent rate hike. Over the same period, average
auto lending rates increased from 12% to 14.8%.

Increases like such push consumers to tap into more personal loans.

Financial services company Eighty20 reported that the average middle-class South
African now spends roughly two-thirds of their salary paying off their debts.
Regarding interest rate hikes, Albertyn said they only make things worse for many
households and are in for a ‘bad run’ if this continues.

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