Surprise interest rate hike

[ToxicBunny]

Probably worth watching the Turkish Lira at the moment. Their intervention was far larger than ours, and if it fails it'll just increase the moves out of EM which will hurt us.

https://www.tradingview.com/x/0pvMlGsS/

Dont... just don't even bring the Lira into this..

It will fail their and it will fail spectacularly... and we're gonna get screwed for it

 

[LazyLion]

On a bond of a bar, the interest rate hike is going to cost you like R250 a month extra no? That's not even bread and milk money for a week . If that's going to break the bank then people should have thought about what they bought before they jumped in with both feet, all the laundry, cats, dogs, children and grandparents

Don't forget all the e-toll fees and resultant food price increases that came in with the new year as well....

 

[Polish]

There goes my ps4 i was contemplating.

That's sad.

 

[TelkomUseless]

Don't forget all the e-toll fees and resultant food price increases that came in with the new year as well....

that is what pi@@#s me off the most. It's all these double taxes that is killing us...

And with rand dipping watch our petrol price skyrocket.

 

[Jola]

Don't forget all the e-toll fees and resultant food price increases that came in with the new year as well....

Also remember that interest rates are supposed to be a function of expected inflation, which IMO will increase a lot.

This will not be the last hike.

 

[Garson007]

Also remember that interest rates are supposed to be a function of expected inflation, which IMO will increase a lot.

Inflation has been doing extremely well over the last two years - considering where our currency was heading. I'm not too worried. This move should hopefully bring inflation down by half a percent.

 

[Brontosaurus]

Can anyone tell me what the expected damage (if any) this'll do to equity markets. I have a lot stashed away in an equity fund.

 

[MKFrost]

Blame quantitative easing and tampering off by the US. Reserve banks are now trying to protect currencies.

There is a big global economy correction coming that should've happened in 2008-2009.

Agree, the system has been kept going by artificial means since 2008 but the market has caught up i.e. reality is a bi**tch. The market always comes back into balance, you can move it here and there but eventually it will catch up and correct itself.

 

[hellfire]

On a bond of a bar, the interest rate hike is going to cost you like R250 a month extra no? That's not even bread and milk money for a week . If that's going to break the bank then people should have thought about what they bought before they jumped in with both feet, all the laundry, cats, dogs, children and grandparents

That's not really a fair statement.
This is the latest in a long list of extra cost pushed onto consumers.
Fuel price was up this month, and with the current USDZAR rates it will keep going up.
eTolls have taken away a couple hundred bucks a month from many motorists (those who are paying)
Inflation is at 6% while salary growth doesn't always match that.
Medical aids went up 9-13% in January.

Add all this together and we're looking at a couple grand of the 'buffer' funds which used to be savings or surplus on 1 December which is now eroded. Suddenly that bond repayment which seemed affordable in Jan 2013 is seeming a little strained

 

[AlphaBravo]

So for the next three months it is bearable, things might go really wonky with the next rate hike...

 

[supersunbird]

Blame quantitative easing and tampering off by the US. Reserve banks are now trying to protect currencies.

There is a big global economy correction coming that should've happened in 2008-2009.

They problem is everyone is running back to the developed markets and they are the ones that should have had a proper correction 2008-2009, seems they have been able to offload their correction to EMs...

 

[Sinbad]

And there goes any chance of GDP growth

 

[ToxicBunny]

They problem is everyone is running back to the developed markets and they are the ones that should have had a proper correction 2008-2009, seems they have been able to offload their correction to EMs...

Completely agree with this..

It will be interesting to see how/if this comes back to bite them in the future...

 

[Creag]

"Surprise interest rate hike"

Nope. According several reputable analyists, if it hadn't been increased, the Rand would deteriorated a more steeply.

And the Rand loses value.... everyone was expecting it to improve on the news.

Maxed out at 11.37 ... eased back a wee bit to 11.27 - and all this from 10.94 this morning

So for the next three months it is bearable, things might go really wonky with the next rate hike...

It may come sooner than that if the pressure on the Rand does not ease. A lot depends on the US Fed. With them laying off QE, money is flowing out of the emerging markets and it seems that the so-called "fragile five" are taking it worst. :'(

 

[Garson007]

Can anyone tell me what the expected damage (if any) this'll do to equity markets. I have a lot stashed away in an equity fund.

I'm going to guess here and say it will do damage locally as we're definitely in a bubble (just check Naspers' PE ratio and dividend yield). Turkish market will definitely crash.

 

[Diplos]

I kept my head down, and didn't buy anything spectacular . Paid extra each month .. because sooner or later they are going to increase the interest rate.


Good luck to us all if they start increasing rates to 15-16%.

Bought a house in 2004, prime was 11% (currently 8.5%) and during the next years it rose to a high of 15.5% in 2008 before slowly decreasing to the current level. I was always aware that to afford my bond I should be able to absorb at least a 5% increase, preferably higher. For that reason I bought what I could afford. The converse approach is partly to blame for our current economic woes. For the past few years savers have been disadvantaged by the low interest rate, now it's their turn to reap some benefits.

 

[saturnz]

And there goes any chance of GDP growth

GDP growth is still positive, the rate of growth has been slowing.

Interest rates have been at 30 year lows for a while now, sufficiently long enough for its effects to run its course and the interest rate has not triggered an increase in the growth in GDP, infact GDP growth has been slowing.

That suggests the economy is constrained more by structural issues than tight monetary policy. So to suggest going forward that GDP growth is going to slow or even turn negative as a result of the hike is not accurate.

 

[Garson007]

For the past few years savers have been disadvantaged by the low interest rate, now it's their turn to reap some benefits.

Short term savings are still some way off from being viable.

 

[Sinbad]

GDP growth is still positive, the rate of growth has been slowing.

Interest rates have been at 30 year lows for a while now, sufficiently long enough for its effects to run its course and the interest rate has not triggered an increase in the growth in GDP, infact GDP growth has been slowing.

That suggests the economy is constrained more by structural issues than tight monetary policy. So to suggest going forward that GDP growth is going to slow or even turn negative as a result of the hike is not accurate.

Tighter policy will slow growth down more though

 

[grok]

On a bond of a bar, the interest rate hike is going to cost you like R250 a month extra no? That's not even bread and milk money for a week . If that's going to break the bank then people should have thought about what they bought before they jumped in with both feet, all the laundry, cats, dogs, children and grandparents

Hey we're already supporting more of our share of freeloaders on single figure increases each year .. and don't forget the surprise buttseks e-tolling's introduced. The more you actually contribute in this country the more you are bled dry.