4 widely held (yet patently false) beliefs about SA’s interest rate policy

South Africans are drowning in debt.

It is therefore unsurprising that everyone and their aunties are obsessed with the interest rate outlook.

The Money Show’s Bruce Whitfield interviewed KPMG Economist Maura Feddersen.

Feddersen said there are a number of myths that people believe about South Africa’s interest rate policy:

  • The South Africa central bank has an inflation target of 3% to 6%. It is, however, not true that an inflation rate below 6% would necessarily lead to an interest rate cut.

  • An interest rate hike, contrary to popular belief, is not a given when inflation breaches the upper limit of the target.

  • Despite people’s fears; a credit ratings downgrade does not inevitably mean higher interest rates.

  • It’s untrue that lower interest rates can fix South Africa’s economy.

Listen to an explanation of each of these myths in the audio below.

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Article brought to us by Old Mutual.

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