Another interest rate hike next month?

S

Skinner

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Mboweni: Interest rates too low
Sep 23 2008 9:56PM
Cape Town - The monetary system is in a very dangerous place, according to Reserve Bank Governor Tito Mboweni. Briefing Parliament's finance committee on Tuesday he pointed out that the rate of inflation has now crossed the repo rate, and a narrow interpretation might be that interest rates are on the point of becoming negative in real terms.

"A hard line monetarist would say that our repo rate is much too low," he said.

He added: "The argument that we have high interest rates doesn't hold. We are running the risk of negative interest rates"
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From: http://www.fin24.com/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2398314
:D
 
Contrary to popular belief, I would not necessarily benefit from the point where interest rates are hiked.

The interest on my cash investments in SA (moneymarket, etc.) for sure increases, but the Rand usually increases in value as well, making my Euros less worth.

As a result, I have balanced my cash investments in SA and my potential Forex transactions (Rand to Euro) proportionally to estimated increases / decreases in repo rate at 6 discrete timepoints per annum. This will hopefully result in maximum yields.
 
sandmanm34 said:
I think it will remain unchanged...
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'Will', or 'should'? I start to wonder if these days it's politicians or economists making these decisions. It is actually not good for the interest rate to be lower than inflation.
 
I think it would have been wiser to raise the interest rates by 0.5 in August and then 0 change in October, not vice versa. Maybe the Rand would have then gotten stronger and more resistant to the sh*t of the last week or so?
 
I don't see it going up again.

Retail sales are down almost 5%
Car sales down at least 30% year on year
Property market is well and truly in crisis
Rate of businesses closing down is reaching alarming proportions.
Went to a couple of usually busy over weekends/public holidays shopping malls today, they were ghost-towns.

Another interest rate hike for the sake of getting figures back in shape would be suicidal for our already frailed economy.

People look at statistics and think that SA is well off compared to the rest of the world, but being in the business I am in I get to see all levels of businesess first-hand on a daily basis, from your corner cafe' to a multinational's head office. Nobody is happy out there, and really a lot of people and businesses in the small to medium sector are facing bankrupcy in the current situation.
 
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