Following the South African Reserve Bank’s decision earlier today to lower its benchmark repo rate by 0.25%, FNB confirms that it will reduce its prime-linked rates by 0.25% with effect from Friday, 22 November.
FNB CEO Harry Kellan says, “We welcome the Reserve Bank’s decision to further ease monetary policy and cut the interest rate, as this will lift consumer and business confidence. This continued positive outlook for the economy is supported by the Reserve Bank’s forecasted decline in interest rates next year, which will reduce the cost of borrowing and further stimulating economic growth.”
“Year-end is typically a period of increased spending and some of this spending is funded by loans or credit card facilities. However, volatility in the rand exchange rate and higher bond yields in many developed economies in recent weeks may result in fewer rate cuts next year. While it is too early to speculate on the impact of new US policies on South Africa, we can potentially expect some significant changes early next year,” adds Kellan.
“As such we would urge customers with debt, home loans in particular, to consider maintaining their payments at present levels rather than reducing the payment in line with lower interest rates if their budget allows. The saving on interest costs over the term of the home loan will be significant.”
FNB Chief Economist Mamello Matikinca-Ngwenya says, “Today’s MPC decision is in line with market expectations. While we continue to anticipate additional 25bp cuts at each meeting until May 2025, there are several challenges that monetary policy is confronting. The United States Fed has signalled a slower-paced interest rate cutting cycle which will place pressure on emerging markets such as South Africa. Furthermore, trade restrictions and looser fiscal policy remain pertinent risks to the outlook on global inflation and financial conditions. Given the forward-looking nature of inflation-targeting, these factors should contribute to the MPC’s assessment of the necessary restrictiveness of monetary policy. To mitigate these pressures, robust reform implementation as well as sufficient monetary and fiscal buffers should remain top priority for SA.”
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