Economist warns expected rate hike ‘would punish wrong people’
The South African Reserve Bank’s Monetary Policy Committee is set to announce the latest repo rate adjustment on Thursday.
An independent economist says the Reserve Bank will be punishing the wrong people if it hikes rates again.
The SARB surprised the market when it hiked the repo rate by 50 basis points in March to 7.75%.
Expectations are that it will be hiked by another 25 basis points this week.
Economist Duma Gqubule says it’s a well-known fact that South Africans’ finances are already under severe pressure.
"I think this is a wrong move by the Reserve Bank to increase interest rates because Eskom has already done enough damage to the economy. So increasing interest rates is equivalent to boxing, and kicking an opponent who is on the floor."
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Gqubule doesn't believe the series of rate hikes is helping the economy.
"Our economy has never been in such a terrible situation since 1994 and I don’t see why the Reserve Bank is increasing interest rates again. It will not achieve any objectives of the Reserve Bank.
“It has now protected the currency and it will not reduce inflation because inflation is not caused by people spending too much."
