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 Rating agencies may come knocking

It is only the middle of February, but the rand has already made two big moves. The first was the rand moving from R14.60 to R 13.20 at the beginning of the year, as emerging markets (EM) became fashionable again. The second was where the rand gave away nearly 90 cents in 2 weeks as the EM rally ran out of steam, and local events started to hit the headlines.

Read more

The cost of sending money home to neighbouring countries

Transferring money home within the Southern African Development Community (SADC) provides vital financial support for many households in neighbouring countries.

Read more

Student bank accounts: Which come out on top?

Being a student signals budgeting and not having a lot of money at your disposal. This means streamlining expenses such as your grocery costs and entertainment budget. But what if your bank account is in fact costing you more than you can afford?

Read more

Can you afford an ambulance in South Africa?

When a loved one is straddling the line between life and death, you won’t hesitate to call an ambulance. This week, Justmoney found out how much an ambulance ride costs in South Africa, whether you can refuse to get into an ambulance, and who pays the bill if you’re unconscious. 

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

President Hotel Easter Special

Price: From R1,500
When: 15 March to 30 April
Where: Cape Town

Kulula-Preskil Island Resort Special

Price: R16,999
When: 11 May -14 September
Where: Mauritius

A Touch Of Madness Tuck In Tuesday Special

Price: R70
When: Tuesdays
Where: Cape Town