More interest rate hikes for 2022

A global pandemic, with a crippling economic effect throughout every country in the world, was only the inevitable next step in this series of unfortunate events. After 2021’s multiple petrol increases, late in the year interest hike, and the ever-increasing cost of living, we are now once again faced with the possibility of even more interest hikes in 2022. With the USA Federal Reserve warning of multiple impending interest rate hikes over 2022 and 2023, we certainly have enough reason to be concerned. Here’s what you need to know.

At least three interest rate hikes are expected in 2022, as the South African Reserve Bank (SARB) has indicated that it will begin unwinding its accommodative monetary policy stance. This means that the government will be more likely to raise the interest rate, which could lead to even more unexpected hikes within the next five to ten years. For more information, see SARB’s 2020 fact sheet. This means that now is the best time to start financially preparing for future rainy days as interest hikes often occur suddenly with little warning or time to prepare.

Reserve Bank governor, Lesetja Kganyago, has warned that the model is a broad policy guide and that future interest-rate decisions will be data-reliant. This means that the statement regarding more unexpected raises can potentially be avoided if the data isn’t there to back it up.

Something to bear in mind, regulated prices such as electricity and water tariffs, all pose a risk to the country’s inflation trajectory, within the next year or two. A tempered rise in rental inflation and reduced increases in medical aid tariffs are likely to drive an unusual response in local inflation. In other words, while rental rates will raise, thereby affecting a lot of people who cannot afford to buy property or struggle with rent as is.

Despite the negative effect this could have on people struggling financially, there is a silver lining. Advanced warning of potential interest hikes is a sign to prepare, and DebtCo Group can assist. Whether you are trying to make it out of the debt trap or require assistance in creating a viable financial safety net for possible interest hikes, our expert Debt Counsellors can assist you regardless of where in South Africa you reside. For more information, please contact our team or complete our online form, and we will contact you.