The SARB has forecast economic growth in SA at 1.2% which is an adjustment down from their 1.7% earlier forecast. They also mentioned that the manufacturing industry has been disappointing which has impacted the unemployment as those figures have also risen.
The problem is the government policies are not business friendly and any targets they set will be hard to achieve. Throw in corruption and mismanagement and you have an economy that is always on the back foot.
I have not being paying much attention and honestly had no idea the Reserve Bank was even considering cutting interest rates as I am not in a financial position of worry. A 1% cut would have been nice, but a 0.25% cut is peanuts if you owe loads of money.
The interest rate cuts today will no doubt make a little difference to some families who are all living on credit and neck deep in debt. For our family this represents a R270 saving on our bond/mortgage which is nothing really and equates to around $15.
When you consider how much the food items have risen over the last few years and will never decrease in price then this may cover the extra you are paying on milk monthly and not much else. The value of the Rand is quite scary and is literally worthless even in South Africa and you do not need to travel to Europe to notice how bad it really is.
The prime lending rate was 11% and now 10.75% and again this is a move in the right direction for the likes of the motor industry, but they literally have a couple of weeks before the fuel levy rises again which will nullify any gains one might have expected.
The problem is with the fuel levy is that this will affect every item in the retail stores and food prices will rise again. The government gives out with the one hand and then takes back more with the other. The next interest rate meeting is only due in 4 months time so the population will be more debt ridden when this happens.
I think it was only a few weeks ago when I wrote an article that 80% of households are living month to month on credit with up to 70% of their monthly salaries covering current debt. There are only a few households who are living properly and I am grateful I have no bills besides the mortgage/bond which is covered by the business. The living from paycheck to paycheck is a distant memory and I would hate to end up back there because I could not control my spending.
The plan was to buy another car and will wait a month or two before I look into that as the repossessions must be pumping offering a wide selection of vehicles to pick up at a decent price. Someone else's pain is always someone's gain and even though I don't like the idea of others suffering I will definitely take advantage of this situation. Buying a vehicle with a warranty and service plan and then selling it for the same purchase price in two years time is not something you can dismiss.