The Monetary Policy Committee of the Reserve Bank will deliver their latest interest rate decision today the 25th of June 2009. The announcement as per usual will be broadcast on TV, but if you can't get to a telly and you still want to see what The Guv, Uncle Tito Mboweni has to say you can logon and watch it live on a webcast. New technology breaks down barriers and this latest initiative is a step in the right direction, even if they won't allow the feed to be embedded into external sites! Many commentators are expecting a 50 basis point reduction. So what does this mean for your R 1 000 000, 20 year Prime linked homeloan?
- 25 bps = R 169.59
- 50 bps = R 338.08
- 100 bps = R 671.66
The CPI inflation figures released by Statistics SA show that inflation is still coming down but it is now stubborn and coming down slower, however the latest PPI or producer inflation has contracted by 3%. That means things are actually getting cheaper to produce, which is very positive news, but will these savings get passed onto you the consumer or will it result in profit taking to recoup losses caused by the economic downturn? Chances are the shops won't be slashing their prices any time soon.
There are a number of factors that influence the MPC and inflation has been the major one. If there is a rate cut today many commentators think that it will be the last one this year, although some financial institutions believe that it will come down further in September again. As these decisions are so dependent on various data that regularly comes out it is hard to predict what will happen in the months to come. Even though data has a time lag, anecdotal evidence suggests that the economy is still floundering and a bit a rate cut stimulus may still be possible.