FIRST National Bank (FNB) said it would maintain its prime lending rate following the decision taken earlier Thursday by the South African Reserve Bank (SARB) Monetary Policy Committee (MPC) to leave rates unchanged until the next MPC meeting in March.
The rate is at 9,25 percent.
“Consumers have been cheered by lower fuel prices and we are seeing lower inflation on the horizon. We can expect further reductions in fuel prices and inflation during February, but this does not mean we should throw caution to the wind,” said FNB CEO Jacques Celliers.
He said borrowers now had an open window of opportunity to reduce their debts as lower prices offer an instant cash boost.
Sizwe Nxedlana, Chief Economist at FNB said the SARB kept rates unchanged at Thursday’s meeting in line with expectations.
The monetary policy committee (MPC) of the SARB has increased the repo rate by a cumulative 75 basis points (to a level of 5.75%) since January 2014.
For most of 2014, the SARB emphasized the need to gradually normalise interest rates in order to combat the inflation risks posed by a weak and vulnerable Rand.
“However, following the 55 percent fall in the oil price since 3Q 2014 risks to both the inflation and exchange rate outlook have diminished.
“It will be extremely difficult for the SARB to justify any interest rates increases in this disinflationary environment. As a result, we expect the SARB to keep rates unchanged for the duration of 2015,” said Nxedlana.
Source : CAJ News Agency