Despite the economic challenges SA homes are facing, rate cut will provide some relief.
There was further relief for debt-overburdened South African households through the announcement of the reduction in the Repo Rate by a an additional 100bps to 4.25 percent on 14 April 2020, bringing it to its lowest point in the last five years. While this is a small measure in the face of job losses and pay cuts that the population is already facing, it is no doubt a welcome part of the overall debt relief puzzle playing out in SA right now.
“Addressing junk status concerns requires structural reforms such as monetary interventions, namely rate cuts, and can be useful for temporary dislocations like Covid-19,” says Pat Semenya, head of ACCA South Africa. “While the rate cut is a welcome development, it can be argued that it excludes those that can’t earn an income during this period, however the rate cut complements the direct cash relief in a form of grants and the social safety nets such as the UIF income replacement, to households.”