Interest rates expected to remain unchanged

By Ofentse Mokae
25 January 2010

Most economists say the Reserve Bank is likely to hold interest rates steady when its policy meeting ends tomorrow.

This is despite the fact that figures to be released on Wednesday are set to show that inflation breached its official target range for the first time in three months.

Only a few economists are expecting a half a percentage point lowering of the repo rate to six-and-a-half-percent tomorrow.

Meanwhile the Democratic Alliance says tomorrow’s decision on interest rates by the Monetary Policy Committee should not be influenced by political considerations, but rather by the Reserve Bank’s constitutional mandate.

The party’s shadow minister on Finance Dion George says media reports on fresh attempts by members of the ANC’s National Executive Committee to undermine the independence of the Reserve Bank are unacceptable.

George says the independence of the Reserve Bank is crucial to the overall financial stability and low inflation, he says higher inflation hurts the entire economy, especially the poor.

“Any undue influence on the Bank would translate to outcomes that severely restrict the efficiency of the Bank in fighting inflation,” George said.

The opposition party says it will always protect the independence of institutions such as the Reserve Bank that serve a greater interest than immediate populist calls.

Adrian Goslett, Assistant Regional Director for RE/MAX of Southern Africa says the positive impact of lower interest rates is however still trickling down to the consumer.

“Even through rates remain unchanged for now, mortgage repayments are still 23,8% lower than late last year when the interest rate hovered around the 15% mark,” said Goslett.