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Press Offices > Banks & Building Societies

First National Bank
Press Office Feature : Rate hike will bring in greater consumer caution

Company: First National Bank
Author:Margaux Stevens
Email:[email protected]
Posted:30 Jan 2014

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Households should budget wisely in anticipation of further interest rate increases

First National Bank (FNB) will increase its prime lending rate by 0.5% from 8.5% to 9.0% following the rate increase announced earlier today by the SARB Monetary Policy Committee.

FNB will increase its prime-linked rates on 30 January 2014.

"The last rate hike was in June 2008 when rates reached 15.5%. Since then, we have had almost five years of falling and stable rates," says Jacques Celliers, FNB CEO.

"Many of our peer countries have already hiked rates in expectation of further reductions in US Federal Reserve QE programme."

"They have done so to ensure domestic economic and currency stability."

"We encourage our consumers to set aside additional amounts in their budgets before mortgage and other payments fall due at the end of the month."

"The rate-hike is positive news for investor's dependant on interest income; they have struggled under declining and stable rates in recent years."

Sizwe Nxedlana, FNB Chief Economist says, "Despite fragile economic growth, muted core inflation and the fact that inflation expectations remain reasonably well behaved the SARB raised interest rates to restrain rising inflationary risks." 

"The risks to inflation facing the SARB stem from the weak rand. Sustained rand weakness could place significant upward pressure on inflation and raise inflation expectations."

"By raising rates today, the SARB has chosen to reduce inflation risks pre-emptively in order to protect long term price stability and household purchasing power."

"Households should budget wisely in anticipation of further interest rate increases."

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