{"id":55328,"date":"2023-10-21T16:07:51","date_gmt":"2023-10-21T16:07:51","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy"},"modified":"2023-10-21T16:19:46","modified_gmt":"2023-10-21T16:19:46","slug":"reserve-bank-crushing-the-economy","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy","title":{"rendered":"Reserve Bank crushing the economy"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>Independent analyst Roelof Botha said the South African Reserve Bank\u2019s (SARB) Monetary Policy Committee (MPC) does not know when to stop and is breaking the economy through high interest rates.<\/p>\n

The Altron FinTech Household Resilience Index ticked slightly higher in the second quarter of 2023, meaning the average household\u2019s financial disposition marginally improved.<\/p>\n

However, the index showed no change year-on-year. With a base level of 100 for the inception period of the index (Q1 2014), the average household\u2019s financial disposition has improved by only 9% in real terms over a period of more than nine years.<\/p>\n

\u201cThe gains made in the post-Covid-19 recovery period have now been wiped out by the highest interest rates in 15 years, with the current real prime overdraft rate more than double the average rate that existed during the tenure of the previous SARB Governor, Gill Marcus,\u201d said Botha, who compiles the index on behalf of Altron FinTech.<\/p>\n

Botha told Business Day TV that, since Q2 2019, the Altron FinTech Index has declined by 1.2%.<\/p>\n

\u201cNow, 1.2% doesn\u2019t sound like a big number, but the dilemma is that over this period, the economy has hardly grown. We are still in a negative situation with regard to the jobs lost as a result of Covid, and there is no demand inflation in the economy,\u201d he said.<\/p>\n

\u201cSo the main reason why the index is under pressure is because of the extraordinarily high interest rates.\u201d<\/p>\n

South Africa is currently in a hiking cycle that started in November 2021. The country has seen ten consecutive interest rate hikes since the start of the cycle and a cumulative 425 basis points of hikes, bringing the repo rate to 8.25%.<\/p>\n

\u201cIt\u2019s as if the Monetary Policy Committee just doesn\u2019t know when to stop,\u201d Botha said.<\/p>\n

\u201cThey are breaking the economy. They must take their foot off the brakes and hit the gas, and that means lower interest rates.\u201d<\/p>\n

He said that on the average value of mortgage bonds administered by Better Bond, homeowners are now paying almost R5,000 a month more on their mortgage bonds.<\/p>\n

\u201cThis is crazy, quite frankly, they are under tremendous pressure,\u201d he said.<\/p>\n

\u201cNobody saw this coming because right now, South Africa has the highest real interest rate of any noteworthy economy in the world. But we also have the highest unemployment rate, so this is really quite strange to me.\u201d<\/p>\n

The MPC has raised the interest rate to this height to bring South Africa\u2019s inflation down and within the SARB\u2019s target range of 3% to 6%.<\/p>\n

Inflation reached this target in June when annual consumer price inflation hit 5.4%. The downward trend continued in July when inflation hit 4.7%.<\/p>\n

However, since July, inflation has again been trending upward, from 4.8% in August to 5.4% in September.<\/p>\n

This has sparked fears of another rate hike, as the MPC has not ruled out another rate hike but has merely paused the current cycle.<\/p>\n

Botha said the true reason behind inflation\u2019s current upward trend comes down to two factors \u2013 the electricity tariff increase and higher fuel prices.<\/p>\n

The electricity tariff increase only kicked in now and is running at 15.1% annualised.<\/p>\n

South Africa also saw higher fuel prices in the past two months as the oil price increased.<\/p>\n

However, Botha said these are insufficient reasons for the SARB to be concerned about inflation and hike the interest rate again.<\/p>\n

\u201cWith a little bit of luck, the electricity issue will work itself out of the CPI as we move into the future,\u201d he said.<\/p>\n

\u201cAnd with the rand having been slightly stronger and oil prices being slightly lower, especially the first two weeks of the month, we can actually look forward to a petrol price decrease next month.\u201d<\/p>\n

He said South Africa\u2019s inflation peaked in July last year \u2013 something the MPC \u201crefuses to acknowledge\u201d.<\/p>\n

\u201cWe don\u2019t have demand inflation in our economy, so why keep on raising interest rates? It\u2019s not necessary; it wasn\u2019t necessary in the first place.\u201d<\/p>\n

SOURCE:dailyinvestor<\/b><\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. Independent analyst Roelof Botha said the South African Reserve Bank\u2019s (SARB) Monetary Policy Committee (MPC) does not know when to stop and is breaking the economy through high interest rates. The Altron FinTech Household Resilience Index ticked slightly higher in the second quarter of 2023, meaning the average household\u2019s financial disposition marginally […]<\/p>\n","protected":false},"author":84,"featured_media":55326,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[274,315,275],"class_list":["post-55328","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nReserve Bank crushing the economy - South Africa<\/title>\n<meta name=\"description\" content=\"Independent analyst Roelof Botha said the South African Reserve Bank\u2019s (SARB) Monetary Policy Committee (MPC) does not k ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Reserve Bank crushing the economy\" \/>\n<meta property=\"og:description\" content=\"Independent analyst Roelof Botha said the South African Reserve Bank\u2019s (SARB) Monetary Policy Committee (MPC) does not k ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-21T16:07:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-21T16:19:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2023\/10\/sm_1697892461.014365.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"576\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Reserve Bank crushing the economy\",\"datePublished\":\"2023-10-21T16:07:51+00:00\",\"dateModified\":\"2023-10-21T16:19:46+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy\"},\"wordCount\":674,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2023\/10\/sm_1697892461.014365.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"files\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-crushing-the-economy\",\"name\":\"Reserve Bank crushing the economy - 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