South Africans are taking on unhealthy levels of debt, but the Reserve Bank will likely bring some relief in the coming months.
South African consumers in debt should receive some relief in the coming months as interest rates start to fall.
“We expect credit growth to remain relatively subdued during the third quarter as the economic environment remains relatively weak,” said Nedbank. “Household credit demand will likely weaken further.” “Bank credit growth is forecast to end the year around 4% before accelerating to 6% in 2025 as interest rates fall further, structural reforms gain some traction, and economic growth improves.”According to Old Mutual Wealth Investment Strategist, Izak Odendaal, the cutting cycle hinges on the next move by the US Federal Reserve , “the most important central bank”.
Interest rate cuts are becoming increasingly likely in the near term due to inflation nearing the 4.5% target , the rand’s strengthening after the formation of the Government of National Unity , and the US Fed’s expected start to cutting rates in the near future.
“The good news is that there is substantial room to cut rates and provide support should this be necessary,” he said.The cuts will be welcomed by many of South Africa’s population, with data showing that the population, especially the wealthy, is taking on unhealthy levels of debt.
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