Following the South African Reserve Bank’s (SARB’s) decision to increase its repo rate by 0.25%, FNB will lift its prime lending rate by 0.25% with effect from Friday, 27 January 2023.
Jacques Celliers, FNB CEO, says, “While central banks around the world may continue to raise interest rates in their fight against inflation, there are clear indications that this rate-hiking cycle may be coming to an end. Higher interest rates have been of significant benefit to consumers who receive income from cash savings instruments. Loadshedding has, however, resulted in additional unplanned expenses for households and businesses that are striving to stay afloat amid the disruptions.
“The recently announced double-digit increase in electricity costs will put further strain on households and businesses, especially SMEs. Despite these challenges, we also believe that adversity tends to inspire innovation and new growth opportunities. In this regard, we are really encouraged by the efforts of individuals and businesses that continue to explore prospects in alternative energy sources like solar. We reiterate our commitment to supporting these initiatives through our individual and commercial client lines of business,” Celliers adds.
Mamello Matikinca-Ngwenya, FNB Chief Economist says, “The Monetary Policy Committee (MPC) moved by less than expected, emphasizing the importance of improved risk sentiment, softening price pressures and an unfolding global economic slowdown. This slowdown will exacerbate weaker local activity as structural impediments related to energy supply and logistics persist. Similar to the softer magnitude of hiking in more advanced regions in December, SA has also lowered its pace since delivering 75bps hikes between July and November 2022.
“We still believe that the MPC will reach the terminal of the current hiking cycle in 1Q23 and that if another 25bps hike is delivered in March, there should be space to support the economy before year-end. Nevertheless, global interest rates generally remain higher for longer as expectations of future inflation remain above target,” Matikinca-Ngwenya concludes.
