SARB hikes interest rates 0.25% - Kokkie Kooyman analyses Lesetja Kganyago’s decision
Banking analyst Kokkie Kooyman looks forward to the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) decision on interest rates. Central bankers globally have lowered interest rates to unprecedented low levels in response to the devastating effects of the pandemic on the economy. The low interest rate environment has been a tailwind for business and consumer confidence but, coupled with supply constraints and quantitative easing in many parts of the world, has led to inflationary pressures. This is causing a reaction in many central banks, including the South African Reserve Bank, which – according to Bloomberg – is expected to hike rates 25 basis points. This means the repo rate will increase from 3.5% to 3.75%. Kooyman analyses the net-positive effect this will have for many of the local banks. He says the banks’ shares look attractive at these levels, given the higher interest rate environment forecasted over the next three to five years.