A seasoned economist was warned that the MPC’s decision to hold rates is misguided and is putting pressure on household budgets, businesses, and employment.
A seasoned economist was warned that the MPC’s decision to hold rates at record highs is misguided and its mistake is using a policy that is designed to target demand-side inflation.
The AFHRI is weighted according to the demand side of the short-term lending industry and calculated every quarter. The first quarter of 2014 is the base period, equalling an index value of 100.According to the index, the ratio of household income to debt costs worsened by 8.7% year over year to record highs in the first quarter of 2024.According to economist Roelof Botha, the debt servicing ratio is at a 15-year high.
This is not good news, especially for the literal millions of South Africans who are battling to make ends meet, with no thanks to the Monetary Policy Committee . “Every economist has pointed to external factors as indicators of the inflation peak, as well as the reasons why inflation has dropped – and it’s not because of the MPCs rate hikes, which have only hurt South Africans and business in the country,” he said.The decision was in line with market expectations, where most economists anticipated a hold. The prevailing view is that the SARB will not cut interest rates ahead of the US Fed.
“Even by definition, this rate is acceptable because the Reserve Bank’s own target range is between 3% and 6%,” Botha said. “It’s quite ridiculous because the USA effectively has full employment – when you consider voluntary unemployment such as students and people on sabbatical – which we do not have, not even remotely,” said Botha.
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