Uncertainties and anxiety mounts as interest rate hike looms

As the South African Reserve Bank prepares to announce changes to the interest rate on Thursday, a significant portion of the population in the North of Johannesburg remains unaware of what the repo rates are and how they work.

This lack of understanding extends to the factors that determine the lending rate, as well as the interplay between the currency exchange rate, inflation, and the overall economy.

Such ignorance is leaving many individuals unprepared for the potential implications of interest rate hikes on their financial situations.

According to interviews we conducted with various individuals, a common sentiment emerged regarding the imminent rate hike.

Thembi Segopotso Mashegoana, burdened with a personal loan, expressed frustration, fearing that escalating interest rates would make it increasingly difficult for people to afford essential assets such as houses and cars.

Mashegoana lamented the growing divide between rising expenses and stagnant salaries, anticipating a future where people toil merely to meet their basic needs.

 “I currently have a personal loan that I despise. Despite my efforts, it seems impossible to fully repay it within the 36-month timeframe. I do not fully understand how the repo rate operates, but I perceive it as a deceptive scheme.

“It deeply frustrates me because I believe that with the constant rise in interest rates, we will eventually find ourselves working solely to cover our living expenses, unable to afford homes and cars, while our salaries remain stagnant. It is a disheartening situation honestly,” said Mashegoana.

Nokuthula Khwela, who does not have any loans but faces increased living expenses, voiced concerns about the rate hike’s impact on her day-to-day life.

With the prospect of securing a new lease and the anticipation of reduced savings due to higher interest rates, Khwela’s financial anxiety is palpable.


“I don’t have any loan and I do not fully understand how it [repo rates)] works I am rather anxious about my day to days. My lease ends in July and I need to find another place which means more expenses for me but with the rates going up again that means I will still be sort of living hand to mouth and being able to save as I anticipated.”

For Olwethu Magubane, who aspires to purchase a house and a vehicle some day, the anticipated rate hike poses a significant obstacle. Denied access to loans due to higher interest rates, Magubeni’s plans have been stifled, highlighting the impact of rate hikes on individuals’ aspirations and dreams.

Other interviewees, who chose to remain anonymous, exhibited a range of sentiments. Some were hesitant to take on further credit commitments, opting to pay off existing debts and curtail their living expenses.

Others expressed frustration over increasing vehicle loan installments and the lack of progress in reducing the principal amount owed.

It is evident that the general public lacks knowledge about the workings of the rates, with only a few individuals having a basic understanding of its connection to the economy.

The imminent rate hike has exacerbated concerns about mounting financial pressures, making it even more challenging for individuals to navigate their budgets and plan for the future.

Nonetheless, the central bank’s decision to raise interest rates comes amidst encouraging developments in consumer inflation.

The latest data revealed a drop in the annual inflation rate to 6.8% in April, marking the lowest reading since May 2022.

However, certain sectors, notably food and non-alcoholic beverages, continue to experience price pressures, tempering the overall positive trend.

The Reserve Bank’s policy actions will undoubtedly shape the financial landscape in the coming months. It is imperative for citizens to remain vigilant and actively seek financial literacy resources to safeguard their economic well-being in an environment of fluctuating interest rates and evolving inflation dynamics.

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