The interest rate is expected to be left unchanged for the third consecutive time, but a rate cut would be more beneficial for the economy as it would help consumer spending and households’ ability to service their debts as the festive season approaches.

According to Thys van Zyl, CEO of Everest Wealth, there is also talk of a possible increase of 25 basis points, with Reserve Bank governor Lesetja Kganyago who has repeatedly warned that the interest rate may have to be hiked one last time.

“A interest rate cut would go a long way to give retail sales a much-needed boost. The interest rate has been hiked ten times since November 2021 by a total of 475 basis points, and increasing it by a further 25 basis points will only further restrict consumer spending and be bad for the economy, as it could give GDP a further boost in the last quarter.”

Meanwhile, the government is busy with other things, such as the Israel-Hamas conflict, which could put the rand under pressure, especially regarding the ANC government’s pro-Palestine stance. South Africa is therefore again not siding with its biggest trading partners and this could cost South Africans dearly.

“The weakness of the rand is a result of bad decisions by the government and must therefore be left to him to correct. Any further interest rate hikes will simply be to try to protect the rand’s value and this is not the solution as political and economic instability bears the blame and ultimately consumers pay the price.”

Inflation has already begun to decline but according to the latest figures it reached 5.9% in October and is therefore still within the Reserve Bank’s target band. The high interest rates to keep inflation in check also results in investment uncertainty which leads to foreign investors fleeing the country.

“Consumers have had a hard time in the past year and a half and are struggling to keep their heads above water. A reduction in the interest rate can help them to breathe a sigh of relief and to escape from the debt spiral in which millions of South Africans find themselves.

“However, any further interest rate hikes will be catastrophic for consumers. Consumers are at their wits’ end with sharp interest rate hikes as well as sharp increases in food prices, the price of petrol, power prices and other living costs. It is time to protect consumers before the last straw breaks the camel’s back.”

The high interest rate means that consumers have to reach even deeper into their pockets with credit card and store debt becoming more expensive and personal loans and car and home payments rising.

Consumers who incurred the debt when the interest rate was much lower are struggling to service their debt or simply cannot afford it anymore. The average salary in the country is also not increasing at the same rate and South Africans are getting poorer and poorer.