EST ›EAR TO SA˜Eǡ IN˜EST
MBABANE – With the continuous increase in interest rates and inflation, savings and investments are on the rise.
All investments and savings linked to interest rate will record exponential gains in this financial year as interest rate was predicted to increase in the coming months.
Economist Sanele Sibiya in an interview mentioned that when interest rate increase, savings and investments also increase.
He said there was a possibility for the interest rate to be hiked again and when that happens, investors will record more profits. The economist availed that disadvantage will be on loans as the repayment rate will increase.
“This is the time to invest in interest rate linked investments as we are currently on a normalisation drive that would take some time,” he said.
The Central Bank of Eswatini (CBE) has raised the discount rate by 50 basis points, from 6.75 per cent to 7.25 per cent. Banks are also expected to increase the prime lending rate for loans extended to businesses and individuals to 10.75 per cent. Headline inflation increased to 5.7 per cent in February from 5.3 per cent in the previous month. The CBE expects the cost of goods and services to increase moderately this year, as they have also revised their inflation forecast by 10 basis points to 5.6 per cent.
The electricity tariff hike of 10.14 per
cent will be effective April 1, 2023; this means E100 will now get you at least 48 units, down from 53 units.
Adjustments
Prices of goods and services will continue to increase exponentially due to the above adjustments.
CBE Governor Dr Phil Mnisi said they held a meeting with the Monetary Policy Consultative Committee (MPCC) to consider the appropriate monetary policy stance.
Mnisi said they then decided to increase the interest rate by 0.5 per cent after taking relevant global and economic developments into consideration.
“We took into account economic development as well as the price and financial stability mandates, and the bank then decided to raise the discount rate by 25 basis points from 6.75 per cent to 7.25 per cent,” he said.
Mnisi also mentioned that the geopolitical tensions continued to weigh on global growth prospects and that the tightening of global monetary policy in response to an elevated inflation outlook impeded economic growth.
‘‘The International Monetary Fund (IMF) notes that the downside risk to global growth has worsened compared to its April 2022 assessment, the level of growth will be clarified in the next assessment,’’ he said.
The governor mentioned that global supply chain disruptions, rising energy and other commodity prices would continue to weigh heavily on the global economic outlook.
In the CBE monetary policy statement released yesterday, Mnisi said economic activity as measured by the quarterly gross domestic product (GDP) grew by 3.8 per cent on a year on year and a revised growth of 6.9 per cent in the third quarter of 2022.