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re rates cut

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annie3
Frequent Contributor
are we looking at more than 1%
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24 REPLIES 24
Not applicable
It's a possibility! Maybe even 1.5.
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Not applicable
No way - 1's a certainty
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annie3
Frequent Contributor
tito has come to the conclusion that we r in a recession. woulnt u know
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Not applicable
Simon normally gets it right. Simon?
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AJT
Super Contributor
Latest CPI figure is 8.4% y/y therefore doubt we will get anything greater than 1%
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SimonPB
Valued Contributor
1 is max .. I think half is likely .. with monthly meetings he'll want to slow down and inflation is being stubbon with eskom and higher oil still to come ..
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Not applicable
In SA, we have a single mandate, inflation targeting. Which leads us to believe the focus is more on CPI than GDP. Unlike US, where dual mandate, inflation and growth.
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Not applicable
Minimum rate cut is 1% and with a max of 1.5% possible.
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klapka
Super Contributor
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Not applicable
I tend to agree with Simon. If he does another 1% then he sets a trend and people expect it to happen at every meeting going forward, This will not bode very well for among other things the housing market as buyers will just sit on the sideline and wait for the next 1% and so on. Consumers might start taking on new debt to fast again increasing inflation outlooks as well. Unfortunately and fortunately we need the full 1 or 1.5 but if he does it over the next 3 to 4 meetings at o,5 ay each then it might be better for the country. We have to remember than foreign captial inflow is happening due our higher interest rates on savings and other investments. Our currency is the strongest performer to date so the call will be tough. He is dambed if he does and he is dambed if he doesn't. OMO
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Theater_Cat
Super Contributor
Surely the MPC should RAISE interest rates! Afterall, we are inflation targeting focussed - not GDP focussed. We need to get back within the 3% to 6% target range! Even if GDP goes to -50%!
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kingsol
Frequent Contributor
what time is the meeting?
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SimonPB
Valued Contributor
announcement starts from 3pm .. meeting started yesterday ..
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kingsol
Frequent Contributor
thanks simonPB
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Not applicable
Cutting the rate will help in the short term and consumers will tend to abuse that and before we know it, inflation will be out of hand. So Tito do not let the unions scare you do what's best for the country. Best way is to cut the rates by 0.5% and have the minister of finance decrease taxes as this will leave people with more disposable income to purchase goods and therefore stimulate growth.
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PLayer
Frequent Contributor
Well we need to look at things in perspective: - Consumers are already over indebted - The recent drop in i rate has not seen an increase of spend but rather a slow donw in debt - NCA also affecting the ability of consumers in getting access to finance - UE is up - More bad news still to come - Inflation yup not in the range - Rand performing well however mining is down i rate drops: I do not see our consumers starting to get them self more in debt but rather start to make ends meet. OMO I say 1% --- 1.5% a bit too much for a conservative person like Tito I agree with Simon that he will not want to set a precedent as they are meeting on a monthly basis
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gamma_spike
Frequent Contributor
tito got it right..... attacking the bank repo:commercial lending premium of 350bps. As rates fall the com banks profit margin kills trickle down. 350bps is a nightmare espec when rates single figure. Think of the inmpact of reducing the premium to 100bps- that sticks 250 bps directly into the borrowers pocket. However, high street banks will loose margin -but have reduced delinquency (on existing debtors) and a high hurdle for new borrowers. In addition the banks can finance way way sub SA prime by arbing currency to offshore branches and fx forwards. The real cost of funds to SA banks is sub 2%....
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john_1
Super Contributor
makes me want to short a bank
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Not applicable
1% she goes - Bloody certainty
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