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 More than just selling – being an entrepreneur at a market

It only takes a couple of seconds for Sheryl Ozinsky, co-founder of the Oranjezicht City Farm (OZCF) Market, to tell whether an entrepreneur will succeed as a local trader. By looking at their body language, she immediately gets a sense of whether they’re going to engage well with their clients and handle the demands of trading at a market.

Read more

22seven: Worth a try?

We live in an era where there is an app for everything. From monitoring your heart rate and menstrual cycle to tracking your sleeping habits and your monthly budget. While this may seem invasive being made aware of your spending habits and where you may be overstepping your budget, it is the best way to rectify and cultivate better financial health.

Read more

My two cents on the Nedbank MobiMoney account

In November last year Nedbank, launched a mobile account called MobiMoney. This account is similar to one of its existing accounts called Send Imali.  However, it’s not only limited to existing Nedbank clients. 

Read more

The cost of being sick in South Africa

Finding affordable healthcare in South Africa is possible, but it comes with its own challenges. Justmoney contacted 13 doctors in Cape Town to find out how much an appointment costs. We also found out how medical schemes assist with these costs, and we compared South Africa with its BRICS counterparts.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Obz Cafe Cocktail Special

Price: R55-R59
When: Tuesdays-Fridays
Where: Cape Town

Telkom January Big Deal

Price: R807 pm
When: Until 31 January
Where: Nationwide

Planet Fitness Special

Price: R199
When: Daily
Where: Nationwide