Reserve Bank Governor Gill Marcus today announced that the Repo Rate will remain unchanged at 5.5%. This is good news for anybody with a mortgage loan , personal loan , car loan or credit card debt. However signs are that at some point we could see an increase in the rate.  The MPC concedes that inflation is likely to breach the upper target during the first quarter of 2012.

Governor Marcus cites cost push pressures being the primary cause for the breach making it easier not to increase rates. The Reserve Bank’s dual mandate of growth/jobs and inflation must have played a major role in keeping rates unchanged. The MPC are probably very aware of the high unemployment rate in South Africa , 25% , which is probably the highest unemployment rate in the world.

Factors that are likely to put pressure on South African inflation over the near future are the oil price and the Rand/Dollar exchange rate.  It seems that the period of rate cuts are over and the next moves in the Repo Rate will be higher. If you have a large level of debt on a variable rate , now might be a good time to consider fixing your interest rate.