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MPC meeting rates

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Not applicable
It seems like just about everyone thinks that the reserve bank won't be changing interest rates today...? Any comments or different opinions out there?
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Inflation slows, eyes on rates (news24) Sep 22 2009 09:20 Inflation has slowed, lower than expected, according to an economist, who says that it brings out the possibility of an interest rate cut.
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Not applicable
Are the banking shares pricing in a rate cut??
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Super Contributor
I think enough is enough. Must balance with ppl trying to earn a living from their interest as well.
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Super Contributor
Rand strong, inflation down, economy struggling there is scope for a cut but prob wont
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Super Contributor
I recon that raising and lowering interest rates is a blunt instrument..they should use the credit act instead..ie when they want to tighten lending reduce the house hold dept threshold and when they want to losen things raise the threshold.. just a thought..as it will have a much shorter lag and would do less damage as interest rates always over and under shoot.
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Super Contributor
to continue this line of thinking one just has to see the power of zero interest rates in the state vs banks that will not lend and the effect it has had on growth.
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Not applicable
We do however have 7 points before we get to zero. The need to inject cash spending into the economy is paramount. The only effective way to do this is to reduce the interest rate........well certainly for me that is.
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Not applicable
Reducing the rate by 50 basis points does what for your spending habits? A 1 mil bond reduces by about R280/pm, a credit card reduces by a small marginal amount (depending on limits) and a car payment reduces proportionately as well. Overall maybe you could "save" maybe R400 (depending on your debt position). So are you going to be the typical SA consumer and spend that extra R400 on cr*p you dont need or will you use the opportunity to reduce your debt position and pay that extra R400 into your credit card etc to pay it off faster and be debt free. In the latter case how does the economy benefit? you aint spending but trying to recover from the exuberance that was had when credit flowed like wine. Spending the extra cash might help the economy but you still in Sh*t because as soon as the rate jumps you cannot afford to live again...... and taking the extra money and investing it in the market to speculate or wealth build also does not benefithe economy in the short term.

You owe, you owe its off to work you go...
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Super Contributor
I think that the rates cuts have already had positive effects on debt management, but people don't have much disposable income yet. Inflation is a complex animal and was largely boosted by the price of oil. The NCA goes a long way to help fiscal policy - but no one tool on its own can do the job. Will be interesting to see what they come up with. Some things still remain expensive. We only just starting to see food comming down. Aparently theres an import tax that was also cut so we should see electronic appliances coming down soon too. Medical expenses remain an issue. Another cut should see the housing market start taking off again, and most certainly investments in enterprise development. Well, anything that causes the house across from me to get sold will make me very happy, cos they not very nice neighbours :-)
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Super Contributor
Fiscal policy isn't just about the extra R400 the man on the street can spend. What is the effect on multi-millionaires, and where they choose to invest their capital? What is the effect on a highly geared Rmulti-billion organisation, where will they direct the extra cash-flow that is generated by a rate cut which injects another R3mil into the balance-sheet? Chances are, its all going into business expansion and enterprise development, which ultimately leads to job-creation. Another 1000-odd people who can spend money instead of living off your generosity - THAT fuels the economy, not your R400 extra spending money.
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Not applicable
Thats cause they dont have that extra R400 to spend ;-). I understand the bigger picture but people like no_way said a rate cut would help him spend more so thus I asked what he would do with the extra cash. Also right now will the big balance sheet holder able to gear there books down by R3mil extra avilable odd in your example decide to expand buiness or focus on short term restructuring and making the business more efficient thus long term more profitable (maybe laying off people and adding responsibilities to others). Pay some people more but the extra costs of salalries vs the lay off savings boosts shreholders profits etc. More people un-employed less spending power by the masses, treasuary is forced to hike taxes on employed people to compensate for social spending and the increased pay the "more productive" employee ends up with is less... like you say visious beast to comtemplate.
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Super Contributor
Yes but would the shareholders be thrilled with all the extra money available once the business is restructured. Now that they are saving R3 mil on less interest PLUS an extra R3 mil on salaries - goodness me, won't they send their boards off to find new investment opportunities instead of paying out all those pathetic directors performance packages? The thing that causes inflation to spiral upward again, is the effect of greed. The more disposable income the consumer has available, the more the producer is able to charge for his goods. The unhealthy lack of competition results in exhorbitant profit margins. Its nice when the shareholder IS the director, but that's not the case in great companies. The way we reduce the effect is by making the trading environment friendly to healthy competition - this even curbs the smaller business owners. The new companies act and the new competitions act are facilitating that side of the economic cycle.
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Not applicable
Not spend more personally but as a whole it would release more cash flow into the SA economy and this will fuel more confidence which can only be good. The average person that can inject the R400 into his/her debt would be much better off.
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Not applicable
When the rates drop say from 15% to 10% a prospective buyer can afford a home + - 30% higher in value, which can be quite significant. not true?
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Super Contributor
not significant at all if the houses are 30% above reasonable value to start. Ifyou are buying at your limit at low interest rates you might find yourself in a spot of bother when they rise.. 15% is the historic average for SA so if you cant afford it at 15% you cant afford it.
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Super Contributor
And - what's the result?
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Super Contributor
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Regular Contributor
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Super Contributor
no change. What'sup Picky?
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