Repo rate unlikely to have impact on South Africa listed property

Posted On Friday, 18 July 2014 13:02 Published by
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Today's 25 basis point increase in the repo rate is unlikely to have any impact on South Africa's listed property sector.

Ian Anderson

The small interest rate hike will not affect longer-term funding rates and should not contribute to a further slowdown in economic activity.

The MPC's decision today gives them some breathing room ahead of the next meeting, where interest rates are likely to be kept on hold if there are no major external shocks and if inflation expectations remain anchored, albeit at levels at the upper end of the SARB's targeted range.

Although the MPC does not have a mandate to support economic growth, it is mindful of the impact that its monetary policy decisions have on the broader economy. Against a backdrop of slowing consumption expenditure, declining confidence, particularly in the private sector and ongoing labour unrest, the South African economy is not in a position to absorb significant interest rates hikes at present.

Interest rates are therefore expected to remain at lower levels for longer, which should lend some support to current listed property valuations and contribute to accelerating distribution growth throughout 2014 and 2015."

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