Raised repo rate - implications for the property market

The SA Reserve Bank Monetary Policy Committee (MPC) has decided to increase the repo rate by 25 basis points to 3.75% a year, with effect from November 19. As a result, the prime rate will rise to 7.25%.
Three committee members voted for an increase, with two members preferring to see the rate unchanged from the 3.5% of the past few months.

In his speech following the decision, Lesetja Kganyago, Governor of the South African Reserve Bank, said that the implied policy rate path of the Quarterly Projection Model (QPM) indicated an increase of 25 basis points in the fourth quarter of 2021, with further increases expected in each quarter of 2022, 2023 and 2024.
"As usual, the QPM repo rate projection is a broad policy guide, changing from one meeting to the next in response to changing risk factors and new data," he said.

"Given the expected trajectory for headline inflation and upside risks, the committee believes a gradual rise in the repo rate will be sufficient to keep inflation expectations well-anchored and moderate the future path of interest rates. However, economic and financial conditions are expected to remain more volatile. The MPC will seek to look through temporary price shocks and focus on second-round effects."

He said the SARB has ensured adequate liquidity in domestic markets and will continue to monitor funding markets for any signs of stress closely. In addition, regulatory relief provided to banks will continue to support lending to households and firms.

article courtesy of private property