Durban — As interest rates held steady this week, South Africans were disappointed that the Reserve Bank’s Monetary Policy Committee failed to bring much-needed relief to the economy.
The Pietermaritzburg Economic Justice and Dignity Group said it had hoped for a repo rate cut to help households which were battling to service their debt.
“It is our contention that a repo rate cut would have freed some money from wages and salaries to meet the daily expenses, ensuring that families are able to meet the demand of running households, with a bit of relief in the immediate term. In addition to this, and in the medium term, it would have allowed for savings towards retirement and other unforeseen circumstances, as current indicators are that families are battling to save because of debts.”
The organisation said a cut could encourage investment into the local economy, resulting in new jobs to ease the unemployment crisis.
Debt Rescue this week said that with the rising cost of living and inflation reducing their purchasing power, families were finding it harder than ever to afford basic necessities, including food.
CEO Neil Roets said: “For people who are heavily in debt, the unchanged interest rate means they continue to face high repayment costs. This makes it even harder to escape the cycle of debt and meet everyday expenses”.
The Sunday Tribune spoke to locals who said they were struggling to make ends meet. Lwazi Gumede said the Reserve Bank only served the interests of capitalists.
“There is an economic war being waged against ordinary people. Interest rates, fuel prices, electricity prices, food prices and taxes. The list is endless. The banks are making insane profits. Why would they reduce interest rates?”
Stewart Klassens said: “By reducing the cost of borrowing, more people may be encouraged to take out loans for investments and spending, which can help stimulate the economy. Furthermore, a lower repo rate can help combat inflation by increasing consumer spending and boosting demand for goods and services.”
Another Durban resident, Sean Perumal, said this was a “killer country” where people needed to earn R30 000 just to survive. “People work hard and still can’t enjoy life. Look at food prices and how poor and average pensioners are struggling to make ends meet.
“On a R2 000 government pension grant, their municipality bill sits at R40 000 and then the municipality expects them to pay their current bill and their so-called debt relief added, which comes to around R6 000 a month on a R2 000 grant. Then the daily cost of basics, and people can’t afford it. Bonds and car payments have tripled in just three years and people are struggling,” said Perumal.
Chief executive of the Pam Golding Property group Dr Andrew Golding said that from a residential property perspective, while the outlook for the local housing market has improved, current economic conditions remained tough. He said this kept housing market activity subdued and household finances under pressure.
“This is evidenced in the fact that, according to Lightstone statistics, the average number of days a home remains on the market in SA’s five major metro markets has risen from 69 days in 2015 to 92 days for 2024 to date”.
Golding said a recent FNB survey showed that one of the main reasons for selling in the second quarter of 2024 was that people were downscaling due to financial pressure.
Economist Dawie Roodt said even if they started cutting interest rates by 25 basis points in a few months’ time, it would help households that were suffering, in terms of cash flow. “But 25 basis points at a time is not huge. But of course, over time, gradually, if they keep on cutting by 25, it will all add up, so it will lead to some relief to some households, but not that much.” The Monetary Policy Committee will meet again in September to make an interest rate decision.
Sunday Tribune