CAPE TOWN: The MPC noted concern over the inflation outlook towards the end of 2015 and into 2016, and a weak rand. The repo rate was last raised by 25 basis points in July 2014 and has remained the same since then. Many economists expected interest rates to rise, as they forecast inflation to be at the upper end of the 3% to 6% target band by the end of the year and into 2016.
There is the possibility that the US will raise interest rates before the end of 2015, which would in all likelihood prompt a further rise in rates in a number of other countries, including SA. Absa senior economist Jacques du Toit said: “The Reserve Bank remains concerned about the outlook for economic growth that is constrained by severe electricity shortages, low levels of consumer and business confidence, inflationary pressures and the possibility of rising interest rates in the US.
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“The forecast is for interest rates to be hiked again later in the year and through the course of 2016 in an attempt to contain inflation. “Consumers with debt will thus be affected by rising debt repayments as a result of the higher interest rates, which will further add to their financial strain.”
