The Monetary Policy Committee (MPC) have decided to increase interest rates by 50 basis points meaning that the prime lending rate is now 15.5%. Reserve Bank governor, Tito Mboweni, made the announcement this afternoon. Some analysts had predicted a 100 basis point interest rate hike with some even thinking the hike will be by 200 basis points. But alas, it was ‘just’ 50 points to the shock of many. Just yesterday, I was listening to a lot of people complaining how a 1% or 2% increase would ‘kill them’. I do not recall anyone thinking that it would only be a .5% increase. Although any form of an increase is painful, todays increase will not hurt too badly, but the fear is that we may get many more ‘small’ increases in the future. Would you rather have these small increases or just one big increase?
