Mboweni's drastic rate threat stuns markets
RESERVE Bank Governor Tito Mboweni's warning that interest rates may rise by two percentage points as part of "drastic measures" to curb runaway inflation sent markets reeling yesterday, amid rising concern that debt-strapped businesses and consumers faced mounting hardship in the months ahead.
As a shocked market digested Mboweni's remarks, bank shares dived nearly 4% to their lowest levels in one-and-a-half years after Absa said rate hikes of that magnitude would add to pressure on consumers from soaring inflation, raising debt costs and loan defaults.
If the banks are worried about rising debt costs and loan defaults, now is the time to get your finances sorted. Before the interest hikes hit, you should review your bank accounts, savings accounts and credit cards. Don't choose a credit card for status, choose it for a better rate of interest. Check out your vehicle insurance and your medical aid. Consider whether you need debt consolidation or debt management. Personal loans can help you consolidate your debts, but shop around for the best deal. It's time to ride the wave of change, before it rides you into the rocks of bankruptcy.