Interest rates hit 14.5%

From Fin24, 6 December 2007

Reserve Bank governor Tito Mboweni took the spirit out of Christmas shopping for many borrowers when he raised interest rates by another 50 basis points, in line with expectations.

This takes the repo rate, the rate at which the Reserve Bank lends money to commercial banks, to 11% and the prime lending rate to 14.5%.

The bank has now hiked interest rates by 400 basis points since tightening began in June last year.

Analyst polled by I-Net Brdige and Reuters all expected a 50 basis point increase on the latest economic indicators, notably the bank's inflation target, CPIX's, surge to 7.3% in October.

Mboweni warned repeatedly in the run-up to Thursday's announcement that consumers need to tighten their belts.

In a precursor to the decision, Mboweni barred photographers from the bank's news conference and changed the format of its rates presentation.

Usually, Mboweni reads a prepared statement before delivering the Monetary Policy Committee's verdict on rates. On Thursday, the repo rate verdict was announced first.

Tell us what you think about the latest rate increase by voting in the Justmoney.co.za poll on the home page.

Check out Justmoney.co.za's Five Festive Fixes for ways of reducing the impact on your pocket during the holiday season.