Consumers should keep an eye on their budget plans for 2020, says FNB

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Following the South African Reserve Bank’s decision earlier today to keep interest rates unchanged, FNB confirms that it will maintain its prime lending rate at 10% and will review its position following the next SARB MPC meeting in January 2020.

FNB CEO Jacques Celliers says, “Year-end presents consumers with temptations to overspend, but it is prudent to keep one eye on budget plans for 2020. Those who have funds can still capitalise on opportunities such as Black Friday to make once-off purchases at lower prices, however it’s important to remember that the festive season period is very long.”

“Additional income from festive sales for small business or annual bonuses for individuals, should go towards building a small buffer in budgets with a view to supplement new year expenses such as school fees in January. People travelling during the holidays should make every use of rewards programmes and purchase fuel or discounted airline tickets with eBucks. Taking a careful approach to spending has become increasingly important in the current climate of a subdued economy,” says Mr Celliers.

Mr Celliers urged consumers to avoid taking on debt for consumption to cover the cost of purchases such as food and travel. Loans should be used in a way that balances the cost of long-term gains with day-to-day living expenses, he adds.

Siphamandla Mkhwanazi, FNB Senior Economist, says “The SARB’s decision to maintain the repo rate at 6.50% came as no major surprise. The combination of heightened concerns around domestic fiscal policy, the subsequent Moody’s decision to downgrade our credit rating outlook from stable to negative, as well as the rising global economic risks outweigh the mitigating factors of low domestic growth and inflation outcomes.”

“The latest round of data points that has slowed consumer spending as well as a contraction in mining, manufacturing and electricity sectors suggest that the 3Q19 economic growth will likely decline. As such, we expect inflationary pressures on the economy to remain relatively benign, which should see inflation contained close to the midpoint of the target over the next year. Nevertheless, we expect the SARB to keep near-term interest rates relatively steady, given the fiscal challenges the country faces,” concludes Mkhwanazi.

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