SARB reduces interest rate with 50 basis points

[mikeMT]

And yet another rate drop, just how low can we go?

[mikeMT]

Definitely sucks for those with little to no debt, not much returns regarding savings.

[krl747]

the people closer to retirement are not happy at all!

[Cyclewizz]

Good for me though !!!!!!!!!!!!

[Wayne Potgieter]

I just bought a house, so good for me.

[DR ◣◢]

Yeah. Saving a bit on the bond!

[Zula]

Happy days!

 

Bond repayment will go down and the JSE will rocket

 

WIN WIN

[Ramrod]

Helps me who just bought a car and is about to buy a house!

[Mike Bike]

yay bond is coming down...

[missionS]

^{Good news indeed for those with a bond to pay monthly but I would seriously recommend that you keep up the payment and not pay less now just because the REPO rate has gone down. Keep up the payment and you will reap the benefits}

^{Note I'm no financial advisor nor claim to be but I have repaid a substantial portion of my mortgage within the first year merely by paying over the maximum amount that I could afford.}

[GrumpyOldGuy]

I think the economy has been seriously stagnating, we are not going into a recession but in my opinion we are at a dead stop. Had they not reduced rates my feeling is we could have tipped into recession in the next 3-6 months.

 

Its really sending out mixed signals though, on one hand you hear Pravin saying S.Africans dont save enough and we need to increase savings, however with the poor returns on savings now it effectively removes any incentive you may have had to do so, which is the aim I suppose, but with only consumer spending keeping the economy afloat, if we stop, we will spiral into recession in the blink of an eye.

[GrumpyOldGuy]

Happy days!

 

Bond repayment will go down and the JSE will rocket

 

WIN WIN

 

Hmmm, pray explain that one to me, its not looking that great right now.

[GrumpyOldGuy]

Just to add to this post, Gill Marcus and Maria Ramos are cut much from the same cloth, but I see Gill Marcus has been given the thumbs up by most economists and financial pundits over her management of the Reserve Bank and her handling of the economy by the latest rate cut, which, as everyone agrees, was absolutely necessary, but contrast this to Maria Ramos who has been publicly lambasted as one of the worst Ceo's of a bank ever, and largely instrumental for the mass exodus of many of ABSA's senior staff and its absolutely shocking results.

 

Strange how the tides flow.!

[CAAD4]

Interesting how sentiment towards her has changed. Perhaps a clash of personalities with Barclays calling the shots now...

[flymango]

Whilst lower interest rates will mean higher disposable income to boost consumer spending in the short term, it might also see real interest rate differentials with other major currencies narrow and therefore a more fundamental exodus from the Rand's carry trade, probably resulting in a net increase in the current account deficit which could more than offset the increased consumer spending. It actually tells me that the SARB is not as independent from the fiscus as it should be, and for me this is the first sign that there is political interference taking place in monetary policy. Not a good sign at all!! Clearly government is concerned about the lack of demand and job losses in the economy (note: not job creation - that's a different story!!).

[GrumpyOldGuy]

Whilst lower interest rates will mean higher disposable income to boost consumer spending in the short term, it might also see real interest rate differentials with other major currencies narrow and therefore a more fundamental exodus from the Rand's carry trade, probably resulting in a net increase in the current account deficit which could more than offset the increased consumer spending. It actually tells me that the SARB is not as independent from the fiscus as it should be, and for me this is the first sign that there is political interference taking place in monetary policy. Not a good sign at all!! Clearly government is concerned about the lack of demand and job losses in the economy (note: not job creation - that's a different story!!).

 

Yeah, there is that risk, but in real terms I dont think it will happen as the currency seems to be strengthening, when, if there was flight from the rand it should be going in the opposite direction, its still early days I admit, but so far it looks promising I think.

 

I am pretty sure there is a lot of political interference taking place Flymango, but we have a unique situation here in that we are staying out of recession only by consumer spending, so there is a huge push to keep that moving, the fear is that if we constrict consumer spending we will spiral into recession immediately.

 

As it is, from my perspective we are not doing that well anyway, factory gate orders are declining, projects are been mothballed, the rand's weakness is impacting on fuel costs which is major portions of our economy and as you say, the results of these issues is mostly seen in job losses, which, lets face it, will also effect consumer spending later, so although we hear all these comforting words from government, in my opinion the reality on the coal face appears very different.

Edited July 21, 2012 by GrumpyOldGuy