Grinch Kganyago hikes Interest Rates and ruins Christmas

And the Monetary Policy Committee (“MPC”) of the South African Reserve Bank (“SARB”) has … yes, oops … done it again! Under the incompetent leadership of SARB governor Lesetja Kganyago, the MPC steers its ill-advised “textbook” course and continues trying to fight imported inflation by increasing domestic interest rates. Thursday’s display of insensitive and ill-timed activism will ruin the Christmas of the majority of all bonded homeowners and financed businesses, far beyond the festive season. And for which purpose? To fight the inflation rate, which had arrived at pre-COVID levels at 7.6% year-on-year and to stabilise the Rand by widening the gap between interest rates in the US and at home, that seems the official tenor of the decision.

But this narrow vision does not take into account the state of the economy, still recovering from the consequences of the pandemic and a totally failed policy to deal with it by the outgoing government of South Africa, neither will it counter any imported inflation, which is based on high oil and gas prices in the wake of the Russian invasion in Ukraine. On the contrary, while the local purchase ability to procure fuel and oil-related products is already stretched beyond limits, the added strain on finances through 0.75% higher interest rates is worsening the situation, which could have been avoided. The year-end business is battling hard enough to make the month-end meet, a postponement of any interest hikes towards the end of the financial year would have been the diligent option to choose.

We feel sorry for the retail sector, the domestic tourism sector and all other sectors where interest rates and fuel consumption play a significant economic role. The much-needed spending power has just been eliminated and Christmas ruined by a group of five members of the MPC and their clueless leader, Grinch Kganyago!

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