Home Loan Interest Rate News: No change.

Interest Rate Decision

The South African Reserve Bank made a surprising decision today (June 25, 2009) to keep interest rates unchanged. The general expectation was that the SARB would announce a 0.5% cut, but the inflation figures are clearly beginning to worry the Governor, Tito Mboweni.

Inflation was recorded at 8% for May 2009 which is down from the same time last here but still well above the target range. The SARB has targeted 6% as the upper band for inflation.

As interest rates are cut, consumers usually begin to spend more money – which starts to push inflation up. But, the major causes of consumer spending currently are food prices, energy bills and the petrol price.

So while South African are spending less on retail items – forcing the economy into a recession, inflation remains high because the cost of living has increased. And as a result interest rates are not being cut.

The Prime Interest Rate stays at 11%.
View the interest rate changes on this graph

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