South Africa’s central bank aims to scrap the prime lending rate in favor of its policy rate, potentially altering loan contracts amounting to trillions of rands.
Making the South African Reserve Bank’s policy rate the reference for prime-linked financial contracts would ensure “a clearer link between monetary policy and lending rates” and improve public understanding of loan pricing, the central bank said in a statement on Monday. The transition should begin from 2027 at the earliest, it said in a consultation paper, starting formal engagements with banks and industry stakeholders on the proposed reform.
South Africa’s SARB Wants Key Rate to be Used to Price Loans
