Easter bunny brings surprise rate decrease

Private Property South Africa
Justin Clarke

Thanks Gill for the early Easter gifts, a 0.5% rate reduction will put an extra spring in the step of the economy, and will help with the house price recovery. For those who don't yet know, at 10% prime we have the lowest interest rates since 1981, that is nearly 30 years.

Investors cash flow will improve not only from the lower cost of servicing their loans, but also general relief for tenants will reduce the defaults, vacancy and improve rental incomes.

So our inefficiencies are well cloaked for now and the strong Rand is doing us proud especially on the inflation front. The rate cut came after the February CPI figure, released last week dropped to 5.7%.

The question is how long will the Rand keep our inflation down, and when will the Eskom, municipal and other parastatal increases be felt?

My guess is around the same time as the consumer recovers enough to go shopping, creating a perfect storm.

And will Gill Marcus be left to use interest rates to steady the ship?

My guess is ... not likely.

Inflation is inevitable. Thats why I love property.

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