The decision of the MPC of the Reserve Bank to retain the repo rate unchanged at 8.25% is as expected, but disappointing for the economy and property, says Samuel Seeff, chairperson of the Seeff Property Group.
Seeff says further that instead of bringing down inflation, the high interest rate has stymied the economy. The debt servicing burden on consumers and home owners and living costs have spiked, while salary hikes have been moderate. Standard Bank also recently signalled concern that the level of home loan distress is on the rise.
In light of the prolonged pressure on the economy, Seeff says an urgent kickstart is needed. Rate cuts need to take effect sooner rather than later. Holding back is simply doing more damage to the economy. A growing economy will also boost the value of the Rand, so concerns about the currency should not be a motivator to keep the rate at the current high level.