As anticipated, the first Monetary Policy Committee (MPC) meeting of the year, and the second meeting under the chairmanship of Gill Marcus, saw the interest rates remain unchanged.
While there are good indications that the South African economy is clear of the recession, it still remains vulnerable. Standard Bank’s economic research indicates that household debt ratios have remained at elevated levels and indicates that in fact only around 14% of the adult population directly benefits from lower interest rates given their exposure to credit. There has also been a lag effect since the decrease of interest rates in the second half of 2009, and the true impact is yet to reflect in the property market in 2010. Furthermore, it is anticipated that while the Soccer World Cup will stimulate the general South African economy, it could also result in inflationary pressure. With the general outlook of rising inflation and economic growth, the next interest rate adjustment may well be upwards. However we anticipate any increases only in early 2011.
Comment from Adrian Goslett, CEO RE/MAX of Southern Africa