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Thread: Interest rate shock

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    Interest rate shock

    Johannesburg - The South African Reserve Bank's (Sarb's) monetary policy committee (MPC) has left the key repo rate unchanged at 7.5%.

    This means that the prime lending rate will remain at 11%.

    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 announcement came after the consumer price index (CPI) eased to 8.0% in May compared to the same month last year, down from 8.4% in April. Earlier on Thursday, the producer price index (PPI) showed deflation of 3% in May 2009, compared to the same month last year.

    Economists argued that falling inflation - although still above the Reserve Bank's target of 3% to 6% - would have nudged the MPC towards a further rate cut.

    "PPI inflation came out much lower than expected," said Investec economist Annabel Bishop prior to the interest rate announcement. "We continue to believe Sarb will cut interest rates by 50 basis points on Thursday and 50 basis points in August."

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    Site Caretaker Dave A's Avatar
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    Once again the economists prove they can't read Tito's mind. But was it really a surprise? After all we've had a 200 point drop during May. I reckon a little more improvement in inflation data and maybe another 50 points in August is possible.

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    Our economy is on life support and I am not sure what will get it going again.
    With regard to credit extension all the banks have slammed the doors shut

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    Moderator IanF's Avatar
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    All the economists were calling for a.5% drop, once again Tito has surprised us. So lets see in August, I reckon .5% then.
    Only stress when you can change the outcome!

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by QUINN View Post
    Our economy is on life support and I am not sure what will get it going again.
    There's lots of people scratching their head over that one. I'm not convinced that dirt cheap credit to consumers is the answer, though. After all, isn't that what got us into this mess.
    Last edited by Dave A; 26-Jun-09 at 09:14 PM.

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    Full Member totius54's Avatar
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    Quote Originally Posted by QUINN View Post
    Our economy is on life support and I am not sure what will get it going again.
    With regard to credit extension all the banks have slammed the doors shut
    Life support is putting it mildly . The patient is in rigor mortise . We had +- 11million jobs before the recession hit . we have lost close to 1.5million jobs and a further 500000 by end of December. We are in very bad shape

    This is it

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