PODCAST | Consumers interest rate risks explained

In this edition of the Business Day Spotlight, we explore how rising interest rates directly affect consumer finances.

Our host Mudiwa Gavaza is joined by Thabani Ndwandwe, chief risk officer at Standard Bank SA. 

The SA Reserve Bank (SARB) kept the repo rate unchanged this week at 8.75%. 

Ndwandwe says the interest rate hiking cycle which started in late 2021 has had a huge effect on consumer pockets. For example, a bond on a house that once stood at R20,000 is now at R28,000. 

He explains that the rise in borrowing costs has happened at a faster rate than incomes for South Africans, which according to the bank’s data are up about 6% on average.

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While inflation slowed further in June to its lowest rate in 20 months at 5.4%, back within SARB’s 3%-6% target range, the full effect of the cumulative rate hikes is still yet to be fully realised. 

Ndwandwe also explains why assisting consumers is a big focus in the current downturn for Standard Bank. 

Topics of discussion include: explaining the effect of interest rates on consumer pockets; the risks that come with interest rate hikes for different groups in the economy, including a bank; inflation trends; and an outlook for the coming year. 

Business Day Spotlight is a TimesLIVE Production.