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 Should you authorize a minor on your credit card?

If you have children who need to move around independently, it may be practical to authorize them as users on your credit card. However, is this the right thing to do?

Economic devastation sees rapid rise in debt counselling

A survey conducted by DebtBusters indicates that consumers are increasingly turning to debt counselling.

How to reduce your risk of identity theft

Imagine your friend is a victim of identity fraud. We have a look at what this entails, and we find out what you can do to avoid getting into this situation yourself.

Deals

Wednesday Burger Nights at The Vineyard

Price: R190
When: Wednesdays
Where: Cape Town

Sanctuary Touch Monthly Special at Sanctuary Spa

Price: R490
When: Mondays to Sundays
Where: Cape Town

Blowdry Packages at Oayssis Hair and Beauty Bar

Price: R850 to R1800
When: Anytime
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions