Reserve Bank keeps interest rate unchanged - a ‘bitter pill’ for property sector

South African Reserve Bank Governor Lesetja Kganyago. Picture: Oupa Mokoena/ Independent Newspapers

South African Reserve Bank Governor Lesetja Kganyago. Picture: Oupa Mokoena/ Independent Newspapers

Published May 30, 2024


The Reserve bank Monetary Policy Committee (MPC) have kept the interest rate unchanged at 8.25%.

The prime lending rate will remain at 11.75%.

The MPC decision was in line with several economists' expectations.

The South African Reserve Bank (SARB) Governor Lesetja Kganyago noted that it was a unanimous decision to keep the benchmark rate unchanged at a 15-year high for the past 12 months

"We now see inflation stabilising at our 4.5% objective in the second quarter of next year. This is an improvement on our March forecast, which only reached this milestone at the end of 2025," SARB Governor Lesetja Kganyago said on Thursday.

The SARB’s targeted range for inflation is between 3% to 6%, with CPI still higher than the targeted midpoint of 4.5%.

A bitter pill for consumers

Bradd Bendall, the interim head of BetterBond said that the decision by the Reserve Bank was a blow to South African consumers.

“Today’s decision to hold the prime lending rate steady yet again, while not surprising, will be a bitter pill for consumers to swallow,” he added.

“The unexpected cooling of inflation had raised hopes that today would mark the start of the Reserve Bank’s long-awaited cutting cycle. However, it seems as if the Reserve Bank will wait for the election's outcome and its impact on the economy and inflation before easing its monetary policy.”

“Faced with the reality that the prime lending rate may only drop later in the year; we urge homeowners to budget wisely and maintain their bond repayments,“ Bendall warned.

A negative impact on the economy

Samuel Seeff, chairman of the Seeff Property Group said that the decision by the MPC is disappointing for the economy and property sector.

“The interest rate has been too high for too long and is negatively impacting the economy and property market,” he added.

“The stance of the Reserve Bank has been too hawkish. While inflation has moderated, the reality is that keeping the interest rate so high for so long has done little to bring down inflation, largely as it is not demand-driven, but rather imported into the economy,” he explained.

Seeff said that instead of bringing down inflation, the high interest rate has stymied the economy.