The Reserve Bank decided this week to leave interest rates unchanged, which means that the repo rate remains at 6,75% and the prime lending rate at 10,25%.
The decision was closely contested within the Monetary Policy Committee, with four members voting to hold rates and two voting to drop them by 25 percentage points. (see https://www.firzt.co.za/news/what-is-the-mpc-and-how-does-it-set-interest-rates/)
Announcing the decision, SARB Governor Lesetja Kganyago noted that while economic uncertainty remained elevated globally, local inflation appeared to have peaked late last year and was expected to continue easing toward its new 3% target.
For the property market, the decision provides short-term certainty for buyers and homeowners, with borrowing costs unchanged for now. The SARB also expects economic growth to keep improving over the medium term, which will boost employment and, ultimately, property demand.
Importantly, the decision also does not signal the end of the rate-cutting cycle. Experts are still forecasting at least two more modest rate reductions this year as inflation subsides, which will make it even easier for first-time buyers to enter the real estate market, and for investors to grow their portfolios.
