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Rate hikes and a recession

The interest rate ramp might cause recession warn experts.

2 June 2008 · Staff Writer

'Rate hike will cause recession'

From Fin24.com 

An increase in interest rates by the SA Reserve Bank will slow down the economy and result in recession and job losses, the United Association of South Africa (Uasa) said on Thursday. Spokesperson Andre Venter said the union was deeply concerned about Reserve Bank governor Tito Mboweni's warning that interest rates may rise by up to two percentage points next month. "Our contention is that if interest rates are raised that much under the present economic conditions, it will slow down the economy even further, resulting in recession and jobs being lost," Venter said.

Justmoney.co.za says:

The economy is stalling, there is contention over whether the interest rate hike will have the desired effect of bringing inflation under control. The reality is that whatever method is applied, things will get worse before they get better. There is no magic bullet that has an immediate economic effect. Changes to the economy take time to manifest. With the pressures on day to day living expenses increasing, now is the time to make sure that your finances are in a stable state. Check that your savings accounts and bank accounts are delivering value for you. Make sure your credit card is providing the best possible deal. Review your vehicle insurance and your life insurance, re-consider your medical aid. Decide whether a personal loan might be neccessary to consolidate your debt.

Whatever you do, look at your finances before June 12th!

 

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