Interest rate cut almost certain

2009-03-23 00:00

OVER-INDEBTED consumers will almost certainly receive a significant interest rate cut when the SA Reserve Bank’s Monetary Policy Committee (MPC) announces its decision this afternoon.

Economists expect Reserve Bank governor Tito Mboweni to lower the repo rate by at least one percentage point from 10,5% to 9,5% — a move which will likely result in banks slashing the prime rate to 13% from its current level of 14%.

Last week, Mboweni announced that the MPC would hold an early meeting in order to make a decision on interest rates.

Some economists have, however, argued that the early meeting this week should have taken place earlier this month.

Efficient Group economist Fanie Joubert warned that the MPC is still confronted with several risks, including South Africa’s large deficit on the current account, the weakening of the rand, and a possible year-end uptick in consumer inflation.

kavith@witness.co.za

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