The West bank of alexandra Township looms in the distance as workers make way fo The rate increase compresses this further by increasing monthly instalments at a time when financial flexibility is already limited.
The financial environment where households are already under significant strain will be reinforced by the 25‑basis point interest rate hike announced by the South African Reserve Bank.
On Thursday, May 28, Lesetja Kganyago, the Governor of the South African Reserve Bank (SARB) said the Monetary Policy Committee (MPC) decided to increase the policy rate by 25 basis points, to 7%, effective from Friday, May 29.
He said four members preferred this action, while two favoured no change.
It is less about the size of the increase and more about the compounding effect of higher borrowing costs alongside rising fuel and food prices, says Lee Naik, CEO at TransUnion South Africa.
