Repo rate hike forcing SA into recession - economist
Efficient group economist Dawie Roodt says with the latest increase in the repo rate, the South African Reserve Bank has probably forced the country's economy into a recession.
I don't think we should blame the Reserve Bank for that. Their function is to make sure that inflation remains low, but the reason the economy is in a recession should be blamed on a government with the wrong macroeconomic policy.
"The economy is probably in a recession, but do not blame the South African Reserve Bank."
The Reserve Bank's Monetary Policy Committee announced the decision to increase the repurchase rate by 50 basis points to 7.75% on Thursday.
Roodt says it this is bad news for indebted South Africans.
"There will be an increase in the mortgage repayment, the instalment for your car and the will have a huge negative impact on economic growth and on demand on the economy.
"This is what the Reserve Bank is trying to achieve. We have more than expected inflation pressures in the South African economy and in order to fight off the inflation, the Reserve Bank is the only institution left to do something about that at the moment. That means the Reserve Bank has to increase interest rates."
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