30 April 09 MPC Rate cut - NB!

chris2.0 said:
My bond just went off from my account - and it's less than last month... I'm with FNB, so it looks like they caved in and did the right thing!
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Nope, the previous rate cut was probably too late for the debit order run and it is corrected now.

Say after me - BANKS WILL NEVER LOWER THE PRIME INTEREST RATE BEFORE SARB LOWERS THE REPO RATE. :)

Or, mind you, do the right thing. :D
 
Consumer inflation dipped to 8.5%

http://www.fin24.com/articles/defau...icleId=1518-25_2508592&IsColumnistStory=False

Johannesburg - South Africa's targeted consumer inflation slowed slightly to 8.5% year-on-year in March from 8.6% in February, official data showed on Wednesday.

Statistics South Africa said headline CPI inflation stood at 1.3% on a monthly basis in March compared to 1.2% in February.

A Reuters poll of 14 economists forecast CPI would slow to 8.4% year-on-year and come in at 1.2% on a monthly basis.

"This is roughly market consensus," Efficient Group economist Dawie Roodt told news agency Sapa.

He expected the consumer price index (CPI) to drop to within the SA Reserve Bank's target of three to six percent around October this year.

"The CPI is then expected to accelerate to about six percent."

Roodt said the Reserve Bank had to be careful not to cut rates by too much.

"They're expected to cut by 100 basis points tomorrow [Thursday] but I think a cut of 50 basis points would be wiser."
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blunomore said:
We still do not understand why they do not call it 1% and be done with it!!
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Basically just finance lingo. In treasury departments, where rates other than repo and prime are also extensively used e.g. LIBOR and JIBAR etc. they could have rates of 7.63% for instance. It could change with 3 basis points to 7.66% during the day. Uniformity just makes it easier all round I guess.
 
Yeah what iris said. It’s easier to say 1bp rather than 0.01% (1 tehth of a percent or point zero one percent).
 
Reserve Bank cuts rates

Johannesburg - The South African Reserve Bank's (Sarb's) monetary policy committee (MPC) has cut the key repo rate by 100 basis points, bringing it down to 8.5%, with the prime lending rate dropping to 12%, with effect from May 4.

The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers.

The cut brings the cumulative drop in lending rates to 350 basis points since December 2008.

Reserve Bank governor Tito Mboweni noted that the global economy remains under pressure despite fiscal and monetary stimuli, with emerging economies experiencing 1.8% growth in 2009 according to the International Monetary Fund.

The outlook for domestic economic growth remains subdued, with no indications for short-term recovery, he said.

Twenty-five of 26 economists polled by Reuters expected the committee to cut the repo rate by one percentage point, with one expecting a 50 basis-point cut.

The Reserve Bank's announcement was brought forward by to 12:30 due to Friday being a public holiday and because of all the economic data coming out on Thursday, a Reserve Bank spokesperson Brian Hoga told I-Net Bridge.

Rate-change announcements are traditionally made at 15:00 on the final day of the two-day MPC meetings.
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As predicted and I refer to my OP :" Many are expecting another 100bps cut...if the rate cut does take place on 30 April, it is doubtfull that banks will be able to pass it immediately on overnight house and car payment debit orders coming off on 1 May..so don't bargain on its relief immediacy and budget it in...or what do you think?"

The effect of this cut will only be felt in real terms in June by home owners.

The banks will run their debit orders before 4 May, 2009 no doubt (Saturday??).

Thus this reduction will only be passed onto consumer by 1 June 2009. The banks will screw all house bond and car debt credit, card debt owners one more time etc..well thats retail banking for you :(
 
gregmcc said:
I don't get it either - everyone knows what 1% means. What does 100 or 150 bps mean anyway!
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A 1% cut on 9.5% gives:

9.5% * (1 - 1%) = 9.405%

This is not the same as lowering the rate by 100 basis points:

9.5% - (100 * 0.01%) = 8.5%

A basis point is 1/100 of a percentage point.
 
Interest on home loans are calculated on a daily basis - the "effects" will start from the 4th of May and people will see it end of May/beginning of June.
 
Lord Anubis said:
As predicted and I refer to my OP :" Many are expecting another 100bps cut...if the rate cut does take place on 30 April, it is doubtfull that banks will be able to pass it immediately on overnight house and car payment debit orders coming off on 1 May..so don't bargain on its relief immediacy and budget it in...or what do you think?"

The effect of this cut will only be felt in real terms in June by home owners.

The banks will run their debit orders before 4 May, 2009 no doubt (Saturday??).

Thus this reduction will only be passed onto consumer by 1 June 2009. The banks will screw all house bond and car debt credit, card debt owners one more time etc..well thats retail banking for you :(
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No one is getting screwed more or less than usual... get a clue. Except if you got debited for your bond the first day you got it and not only after a month, u are not getting screwed...
 
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Lord Anubis said:
Thus this reduction will only be passed onto consumer by 1 June 2009. The banks will screw all house bond and car debt credit, card debt owners one more time etc..well thats retail banking for you :(
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You just really don't understand the concept of interest calculated daily do you?
 
Poor Anubis should stay away from banking if he doesn't understand it... hehehe. Yes they try and screw us and its we that allow it. If you don't want the banks to earn interest from you, then don't go into loans with them or anyone else.
 
Lol. When I saw that Lord Anubis created another thread for the next rate cut I thought to myself it must be Tito trying to mess with us posting his predictions a month in advance.
No offense or anything intended, just sharing a chuckle I had with myself and I.
 
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