There will be another meeting of the Reserve Bank this week- what are the possibilities of another interest hike?
Hopes are high that we will not see an interest rate hike this week, however, during the course of the year there could possibly be an increase of another 50 basis points. Currently the inflation rate is 6.4% and we don’t predict much change here. The unemployment rate has increased to 26.7%, which equates to about 5 million South Africans- the highest in more than a decade. The consumer credit index is down by 6 points to 52.1% which was mainly due to the cost of servicing domestic/household debt.
The rand weakened over the last 30 days by 1.6%- this could be attributed to rumours about the possible arrest of Finance Minister, Pravin Gordhan. Further to this, the mining sector has not shown positive results for South Africa either.
Gold traded at $1271 per fine ounce, which is still an upward movement of 19% in the last 90 days. We trust that it will stabilise from here and will not reach the $1300 per fine ounce as predicted
In terms of the all shares price index, it still shows an upward movement of 4.46% in the last 90 days, so it’s not all doom and gloom.
It seems like bad news keeps pouring in, but what else was significant?
The rand weakened against the dollar on Thursday and share prices fell – elevating concerns about the domestic growth of the continent’s third largest economy.
Official data showed that mining output plunged by 18% and manufacturing production shrunk by 2 percent.
Want to know more about the IMF’s comments?
According to the International Monetary Fund, Egypt has over taken South Africa as the second largest economy in Africa. Their projection is that South Africa’s economy will grow by a mere 0.6 percent, which is lower than the 0.9 percent predicted by the South African government. Nigeria still holds the number one spot.
This is indeed not a pretty picture. Ecsponent focuses on family finances during May and explains what families can do to protect their family’s well-being and future, especially if the prime interest rate continues to rise.
There are two keys things a family should do: live within your means and start saving for big expenses such as private school fees and university early.
It is so important to give our children the best possible advantage and this was backed by a recent study by Standard Bank showing that 50% of employees in the upper segment of South Africa’s middle class had tertiary qualifications and this is a clear signal of how important education is to earn a high income. 60% of the employed in this income bracket is over the age of 45.