Interest rate rises

By Staff Writer


From Fin 24, 11 October, 2007


By Ana Monteiro

The South African Reserve Bank's monetary policy committee has increased interest rates by half a percentage point for the seventh time since June 2006.

The committee's decision takes the total increase in the repurchase or "repo" rate - the rate at which banks lend money to each other - to 350 basis points since the rate-tightening cycle began.

The prime lending rate - the rate at which banks lend to consumers - has now increased to 14%, its highest level since September 2003.

Unlike previous meetings where consensus forecasts pointed to rates increases, economists were divided on what the committee would decide: in a Reuters poll of 19 economists, 12 expected interest rates would be kept steady, while the remainder expected another 50 basis-point increase due to inflation pressures.

Consensus from a Bloomberg poll of 28 economists was similar, with 16 economists expecting rates to stay put and 12 expecting an increase.

Despite being lower in August, consumer price inflation excluding mortgage rates (CPIX, which the Reserve Bank targets) has remained above the 6% upper end of the target range for five months, coming in at 6.3% in August.

Earlier in the week, the Congress of South African Trade Unions (Cosatu) called on the Reserve Bank not to increase rates any further, saying the policy of raising rates had had "a disastrous impact" on South Africans.

Recent Articles

Featured Debt consolidation – Explained

Dealing with debt can be daunting. If you’re struggling to keep track of which store account to pay next and weighing up which credit card is more important to settle first, you may have considered debt consolation. At Justmoney, we’ve decided to get down to the basics and explain what this entails and what impact you can anticipate on your credit score.  

Read more

3 Vehicle financing options compared – which is cheaper?

Buying a car is a considered a milestone, both in life and financially. Unless you’re able to fork out the cash, many opt for financing. But often the excitement to drive it off the showroom floor overshadows the need to check if you’re choosing the most-suited option. To help you make the best-informed decision we compare available vehicle financing structures in South Africa.

Read more

Splitwise: Split the bill not the friendship

Collecting your friends’ debt to you can be draining. You don’t want to ruin your friendship with them, and it can also be extremely awkward. I don’t know how many times I have written, deleted, and rephrased texts, reminding people to pay what is due to me.

Read more

Stokvel-friendly accounts – which one is fair?

The stokvel economy is approximately worth R49 billion in South Africa. This is according to the National Stokvel Association of South Africa (Nasasa). Altogether 24% of these stokvels are in Gauteng, while only 6% are in the Western Cape.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Cape Town Fish Market Swartland Special

Price: From R123
When: Until 14 July
Where: Cape Town

Aha Casa do Sol Pay 2 Stay 3 Special

Price: R1,200
When: Until 31 July
Where: Mpumalanga

Open University Free Courses

Price: Free
When: Daily
Where: Online