Friday, August 14, 2009
Mboweni cuts the interest rate
By Nomava Nobumba
14 August 2009
Reserve Bank Governor Tito Mboweni and the Monetary Policy Committee have cut the interest rate with 50 basis points yesterday.
Speaking at the end of a two-day MPC meeting in Pretoria, Mboweni said although there were encouraging signs that the economic meltdown may have reached its turning point, the South African economy appeared to be lagging behind.
This is good news to consumers who are in debt as the Commercial banks are expected to lower their prime lending rate.
However, this will penalise savers as they will get less on their investments.
The governor said inflation had declined materially outside the inflation target range. South Africa’s inflation target range is between 3 and 6 percent.
Earlier Trade Unions had called for 200 basis points cut in the repo rate to stimulate the economy.
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2 comments:
Dropping interest rates in an economy like this may help save the banks money in not paying interest, but it deters people from wanting to save. Many people are turning to mortgage leads to help get extra cash in times like this.
It's a crazy predicament we are all in with interest rates going lower. They are pushing people not to save money and to take out loans. How backwards does that sound? Shopping around for mortgage leads and other low risk credit options, if you must use credit at this time, are the safest ways to go and can have great results to get you back on track of financial responsibility.
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