Reactions to the rate cut
The interest rate was cut yesterday by 100 basis points or one percent.
This basically means that money is now cheaper to borrow because you don't need to pay back as much Rand for Rand as you did yesterday morning.
Yay!
The effect of this is that you may be able to renegotiate your mortgage, and put money back into your pocket.
This is what the financial news outlets had to say about the rate cut.
The Mail and Guardian came in with the headline ' More interest rate cuts needed'. They were of this opinion because one of their interviewed economists stated that The Guv, Tito Mboweni had half jokingly said that head had suggested a rate cut of 200 basis points but that the Monetary Policy committee had restrained him and gone with the more conservative approach, which is well in line with the tendencies of central bankers.
The article then further predicted rate cuts of another 100 basis points in April. The call was then that interest rates would drop to 12% by June 2009, followed by a possible further two rate cuts of around 50 basis points bring the interest rate down to 11% by October of this year.
The expectation was that after that interest rate cutting would stabilise and that it would be help fairly constant through out 2010. In a further article the Mail and Guardian quoted Uncle Tito on him calling for a 200 basis point cut after he had just returned from Davos, 'They probably thought it was the snow, but I went in there all guns blazing'.
Uncle Tito was also cautionary about a 'tough time ahead' as we weather the global financial storm.
Business Day followed on with the 'all guns blazing' quote and also quoted Mboweni on the tough times ahead that 'any politician who doesn't convey that message to his supporters is living in cloud cuckoo-land'.
They noted that the Rand had weakened on the decision and then firmed up after taking the news with no real worries. There have been major concerns about aggressive rate cutting damaging the value of our currency, but it seems we can take the 100 basis points. They also noted the 'front loading' of the rate cuts with more gentle cuts expected at the end of the year.
Business Report called it a 'decent cut' adding that petrol and food price pressures have lightened.
Justmoney knows it is going to get better it will just take some time. In the meantime get your budget planned and sorted out and if you own a property why not consolidate some of your debts into your mortgage and save money. A mortgage will often be the cheapest form of debt that anyone will take, and it just got a little bit cheaper.
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