Gill Marcus, South African Reserve Bank governor, announced a cut of 50 basis points in its repo rate (the rate at which central banks lend to other banks) to 5.0%. This is the lowest it’s been in almost 40 years!
If all this economic jargon confuses you, don’t fret. We’ve summed up how the interest rate cut will be affecting you.
• Consumer and business confidence is up, which will eventually boost investment and consumption.
• Monthly installments on home loans will decrease, which means your debt will be less. And this equals more money in your pocket! Yay!
• The Rand will be a bit weaker, which isn’t great for travelers, but good news for exporters.
• Pensioners (and those who are dependent on their investments for income) will be hit the hardest – they will be earning less interest on their savings.
Even though consumer confidence is up, this doesn’t mean you can run to the nearest mall and buy those shoes you’ve been eying out. According to Jacques du Toit, Property Analyst at Absa, the future of our economy (and pockets) is still uncertain. “The future outlook for interest rates will depend on global and domestic economic developments and movements in key indicators such as economic growth, inflation and the factors affecting inflation, which are expected to impact household and company finances as well as consumer and business confidence and spending.”
In other words, save any extra money you might have left at the end of the month and resist the urge to splurge!