FNB economists warn that the Reserve Bank risks thrusting South Africa into technical recession if interest rates remain high unnecessarily.
Economists at FNB have cautioned that if the South African Reserve Bank maintains its high interest rates beyond what is necessary, the country could experience a technical recession.
During the Covid-19 pandemic, the MPC had lowered interest rates to provide relief to households, but they began to raise rates in November 2021 due to rising inflation. Household consumption expenditure grew sluggishly at 0.7% last year, a significant decrease from the 2.5% growth rate observed in 2022.
Additionally, the rand has weakened, the inflation-adjusted JSE All Share index has sharply dipped, and real residential property price growth has sustained.
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