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Interest rate unlikely to change - economists

By unknown | Oct 09, 2008 | COMMENTS [ 0 ]

Robert Laing

Robert Laing

Reserve Bank governor Tito Mboweni is expected to announce an unchanged repo rate of 12percent when he reads the Monetary Policy Committee's (MPC) decision at 3pm this afternoon.

All 24 economists polled by Reuters along with all 18 polled by Bloomberg agreed the Reserve Bank would hold the interest it charged commercial banks at the current level, which in turn means the prime rate on which home and car loans are based will remain at 15,5percent.

JSE-listed car and boat dealership chain Combined Motor Holdings' interim results, released yesterday, for the six months ended in August, showed the strain monetary tightening is causing consumer dependant businesses.

Combined Motor Holdings' interim revenue fell 23percent to R3,5billion, and its attributable profit crashed 88percent to R7,5million.

Jebb McIntosh, Combined Motor Holdings chief executive, said the past year has seen the group close 15 of its 70 outlets and cut its workforce by 600 people, about a fifth of its head count. "New car sales have dropped 40percent over the past two years. I'm not an economist, but I think the sooner interest rates come down the better."

No leading economists expect rates to go up, and none think it likely the South African Reserve Bank will follow the US, UK and Australian central banks suit with a surprise cut.

The consensus among economists is that interest rates will remain unchanged this year.


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