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Glimmer of hope despite a tough economic year

19 November 2020 FNB
Jacques Celliers, CEO at FNB

Jacques Celliers, CEO at FNB

Following the South African Reserve Bank’s (SARB) decision to keep interest rates unchanged, FNB confirms it will keep its prime lending rate at 7%.

FNB CEO Jacques Celliers says, “2020 was one of the toughest years in our economic history, however, the recovery of economic activity among our customers provides a silver lining. For consumers and businesses this is a time to rebuild financial reserves and to look for new opportunities.”

“As part of our commitment to help customers, we have introduced new features to our platform based nav» functionality on our App. Customers now have detailed and easy to use smart budgeting tools and we offer additional support for SMEs through a marketplace which links businesses with over 3 million potential customers who use our App. Our marketplace is expected to scale quickly from the 1500 active banked businesses with a potential to generate considerable benefits for businesses. As we approach the festive season, we also urge consumers to spend responsibly and to consider safer ways to shop,” adds Mr Celliers.

Chief Economist at FNB, Mamello Matikinca-Ngwenya, says “The current economic shock has kept demand in the economy very low, and as a result inflation has remained contained. The central bank has responded decisively to these shocks. The SARB has reduced the repo rate significantly since the onset of the crisis, providing much needed relief to consumers and business. We are not surprised the bank opted to keep rates on hold at this meeting. However, should inflation surprise to the downside it, may be open to more cuts in the year ahead.”

“We expect inflation to remain well contained within the inflation target over the medium term. At the moment, we assess the risks to the inflation outlook to be balanced. In the absence of any severe shocks monetary policy should remain accommodative over the medium term. We are, however, concerned about the medium-to-long-term growth outlook. In the absence of the implementation of growth enhancing measures, the growth outlook beyond 2021 leaves much to be desired. This will have negative implications for public finances; while the MTBPS sets forward targets to reduce expenditure we are concerned that government may not to be able to reach these targets. High government debt and weak GDP growth continue to present material risks,” adds Matikinca-Ngwenya.

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