By Anita Dangazele
- Interest rates have gone up today, meaning loan repayments on homes, cars and store accounts will cost more.
- The Reserve Bank blames rising fuel prices, after prices rose to 4.4% in August, up from 4.3% in July.
If you’re paying off a home, a car, or something on a store account, your monthly payment is about to get bigger. The Reserve Bank raised interest rates today for the first time since May.
The bank’s Governor, Lesetja Kganyago, said the rate banks charge each other for borrowing money went up by a small amount, 0.25%.
This might sound small, but it affects almost every loan in the country. Banks now charge more interest on home loans, car finance, and anything else you’re paying off over time.
This decision came out the same morning we learned that prices overall went up 4.4% in August, a little more than July’s 4.3%.
Kganyago said the biggest reason for the rate hike is fuel. Petrol and diesel keep costing more, and South Africa is paying more for fuel than what’s built into the price you see at the pump. He warned prices are likely to keep climbing before things get easier again, probably not until the end of 2027.
There was more bad news too. Kganyago said South Africa could face a drought soon, because of a weather pattern called El Niño, even though food itself has actually been getting a little cheaper lately.
He said the economy is expected to grow a bit this year, about 1.2%, but he’s more worried about things getting worse than about them getting better.
Before today, nobody was completely sure which way this would go. Some experts thought rates would stay the same, like they did in July. In the end, the ongoing war in the Middle East, and what it’s doing to oil prices, tipped the scale toward raising rates.
If you’re already struggling with debt, this makes things harder. We’ve already told you this year that more South Africans are taking money out of their retirement savings just to survive, and that people applying for help with debt are already giving up more than half their pay to loan repayments before they’ve bought a single thing they actually need.
Pictured above: The Reserve Bank has raised the interest rate from 7% to 7.25% basis points.
Image source: Pexels
