Guiding consumers since 2009

What is in an interest rate cut?

By Staff Writer
The Monetary Policy Committee, the folks at the Reserve Bank who set the interest rates, have their first meeting for 2010 on Monday 25 and Tuesday 26th of January, next week. The MPC is mandated to follow a policy of inflation targeting using interest rates. According to international ratings agency S&P there is no change in policy expected. The new Governor, Gill Marcus, should have found her feet by now and she calls the shots on the interest rate. So what does the interest rate affect?

 

 

Inflation is the key factor in whether the MPC decides to change the interest rate. Inflation is currently sitting at 5.8% which is just within the Reserve Bank target range of 3 to 6 percent. This has led analysts to believe that there will be no change in the interest rate next week. Inflation targeting using interest rates is a heavy hand and takes some time to translate its effects into the general economy.

Your homeloan is generally granted at some expression of Prime. Prime is the rate at which the commercial banks will lend to you at, the Repo rate is the interest rate at which commercial banks can borrow money from the Reserve Bank at. Your homeloan is more than likely linked to prime, if the MPC changes Repo this will alter the Prime which is generally 3.5% above the Repo. Credit cards are often linked to the interest rate as are any personal loans you may take. There is no expectation of the interest rate changing but we shall see.

Recent Articles

Featured Calculate your vehicle finance instalments

You’ve dreamed of a set of wheels since you can remember, and now that you’re a responsible adult with a steady income, you’re ready to take on funding to make this dream a reality. But what kind of vehicle finance options are available to you? Justmoney gives you the rundown.

Check the interest before you take a loan

Justmoney takes a look at what influences the interest rate on a personal loan, the difference between secured and unsecured loans, and its impact on the interest rate.

One retirement, so many funds – pick the right one

Saving for retirement should be one of your priorities. However, it can be confusing to choose between a pension fund, provident fund, preservation fund, or a retirement annuity if you’re not familiar with them.

Which funeral cover lays your worries to rest?

A funeral can be as expensive as R50,000, depending on the type of funeral you want. That is why purchasing funeral cover is important. However, you don’t have to accept every offer that is put on the table. Shopping around can save you a large amount of money.

Deals

Telkom August Big Deal

Price: R249 per month
When: Until 31 August
Where: Nationwide

KFC Streetwise Winter Treat

Price: R99
When: Until 30 August
Where: Online

20% off for Nedbank cardholders at aha hotels

Price: Available on request
When: Daily
Where: Nationwide