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Repo rate increase raises concern about farming debt

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Source: Susan Marais, Farmer’s Weekly, 19 November 2021, photo credit: www.agriculture.com.ph

A hike in interest rates on the back of increased administrative costs, rather than “consumer pull” is of grave concern.

This was according to Prof André Jooste, an agricultural economist affiliated with Stellenbosch University.

Lesetja Kganyago, governor of the South African Reserve Bank (SARB), announced an increase of 25 basis points in the repo rate to 3,75% on Thursday, 18 November.

The repo rate is the rate at which SARB lends money to commercial banks.

The decision to increase the repo rate was based on the sharp rise in global food prices, crude oil prices, electricity, and other administrated prices, a statement by the SARB said.

“It just does not seem right that interest rates are on the increase due to factors that have nothing to do with consumers,” Jooste said.

“This is entirely different from an instance where interest rates increase due to overspending by consumers.”
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