Last interest rates meetings for Tito

By Staff Writer

The Guv, Tito Mboweni has already had his farewell dinner from the Reserve Bank. He is only leaving in November and between now and then there are still three meetings of the Monetary Policy Committee. The MPC under Mboweni has been pursuing a policy of inflation targeting via interest rates. First they put them up and then they cut them, and recently they have been holding them. Few economists believe that there will be a cut this time around, so what are the factors involved?

 

  • Inflation is coming down
  • Marcus replacing Mboweni
  • No policy changes in sight

 

Inflation targeting is a slow process as interest rate changes take months to filter into the economy. Cuts that were made at the beginning of the year are only now starting to manifest in the day to day economy. The high interest rates that we suffered helped to bring down credit spending and just in time to avoid the worst of the global financial crisis. They have not been popular but interest rate manipulation should not be confused with populist. Populists may cry out against interest rates but they favour those with large borrowings not workers.

The fact is interest rate manipulation has helped to slow inflation, and low inflation is in the interests of the poor. When you spend on credit essentially buying today on the promise of future earning you overheat the economy and a crash is inevitable. The National Credit Act also helped to slow our profligate spending just at the right time. So people are buying less on credit, inflation is cooling down and The Guv still has another three meetings in which to pursue his mandated policy. Recent polls suggest that most economists do not expect a cut to be forthcoming and that the Reserve Bank already lies in the hands of the New Guv, Gill Marcus.

Recent Articles

Featured Register your customary marriage or lose the right to inherit estate

December is that time of the year when we will see at least one suitor sending his uncles to negotiate the price of his future wife. Lobola, as the bride price is known, has always been an important element of the African marriage.

Read more

Changing from one medical scheme to another - effortlessly

It is coming up to the end of the year and you might be looking to change medical schemes, or options within a scheme in preparation for the new year. While you don’t necessarily have to wait for year-end to do so, providers often recommend it.

Read more

Your guide to financially surviving Christmas

There are a few times each year where you need to dig deeper into your pocket and spend more money such as birthdays, anniversaries, and the Christmas period. Whether you celebrate this religious holiday or not, the festive period - depending on how you choose to spend it - means increased travelling, buying of gifts, entertaining, and eating out at restaurants.


Read more

Trump, Trump and a little bit of South Africa

What a November we had, with the rand staging one of its best months and closing below the R14.00 level. To be honest, this looked like quite a far-fetched possibility at one stage during the month. It seems that the tide has changed a little, even though it might be short lived since the US dollar bulls are not so sure of their case anymore.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Free iCollege Scholarship

Price: R600
When: Until 16 May 2019
Where: Nationwide

Telkom December Big Deal

Price: R459 pm
When: Until 31 December
Where: Nationwide

Money Savvy Kids Giveaway

Price: R450
When: 8 December
Where: Johannesburg (Milpark)