Gill Marcus will be taking over from Tito Mboweni on the first of November 2009. There is one more meeting of the Monetary Policy Committee before the Old Guv makes way for the new. This is scheduled to start from the 22nd of September 2009. There are a number of factors that could support a rate cut. Mboweni has been cutting but Marcus is more of an unknown quantity. So what could cause the MPC to cut the interest rates again?
- Electricity is going up
- Tax revenues are falling
- Recession is still here
A rate cut makes the most impact on your homeloan, especially if you have a prime linked bond. What you pay can vary widely depending on the size of your homeloan and any change in the interest rate. So for home owners a rate cut would be welcome. With electricity prices expected to jump this will bring pressure onto the consumer, with tax revenues falling due to the recession there will be pressure from government to kick start the economy with a rate cut and up their income stream.
South Africa is still in a recession, even if the stats lag behind the actual growth rate we are not out of recession yet. Interest rates have been massively high and now are on a more normal footing. The old Guv, Tito Mboweni, was mandated with a policy of inflation targeting which he carried out. He is addressing the last AGM of the Reserve Bank where he will be governor, it will be interesting to see what hints, if any he makes about the upcoming meeting of the Monetary Policy Committee.
