Attorney Michael de Broglio on: South Africa, Law, Politics, Attorneys, Sport, Photography, Technology, Gadgets, Media, Crime, Road Accidents Fund,
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It was good to read, in the Reserve Bank governor Jill Marcus’ decision to drop rates by 50 basis points, that inflation is expected to go down, touching 4.9% next year. Economists like to make everything sound fancy and so when they say 50 basis points, what they really mean is 0,5%, so they turn 0,5% into points and then call it 50 points. I don’t think people thought for a long time that we were going to get another interest rate drop, and I certainly don’t think there are many to come, so people really need to use this as an opportunity to reduce bonds on properties, pay off the motorcar and reduce their debt, because somewhere along the line the interest rate cycle is going to start heading up, and those who have indebted themselves at this time, when interest rates are historically low, are going to be squealing – but it is quite predictable and something that one should prepare for and whether it takes 1, 2 or 5 years for interest rates to head on up, they most certainly will ultimately.
Posted by Michael de Broglio on Friday 27-Jul-12
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Comments
Daniela said:
on Friday 03-Aug-12 03:28 PM
I have to agree with most others on this blog, irresponsible spending is going to rise to ridiculously high levels.
Tans said:
on Sunday 29-Jul-12 11:41 AM
My concern is that a low interest rate will do the opposite: actually create more debt. Knowing the materialistic mindset that prevails (curses us?) today, it is more likely that people will see this as an opportunity to buy more things on credit because of the lower interest rate. My forecast is that people will use this is a windfall chance to buy, buy, and buy, and then when the interest rise does occur, there will be another financial crisis. This also seems to be somewhat unfair to the pensioners and those who may have saved money and who are using interest off investments to live or supplement income. Should they lose out because the next generation is financially irresponsible?? Maybe our government should focus more on accountability of government officials in respect of fiscal and other decisions instead of using interest rates as a desperate way to diffuse inflation issues?
Catherine said:
on Friday 27-Jul-12 03:56 PM
I totally agree that it is time for people to clear debts. However, people think differently some might think since they now have disposable income it is time to buy things they have wanted for a long time.
Kaylene said:
on Friday 27-Jul-12 03:31 PM
Its true ECONOMISTS does make everything sound fancy, and yet if you put it in real terms then it's not so wow. I hope that alot of people are going to be thinking the same way
Henrietta said:
on Friday 27-Jul-12 02:59 PM
I agree with Cherise and hope most will take this opportunity and make the best of it, because I believe worst is still to come.
Cherise said:
on Friday 27-Jul-12 02:52 PM
I have to agree that people should see this as a perfect time to settle major debts and live an affordable life. Lets hope most will do so
Angelique said:
on Friday 27-Jul-12 12:13 PM
I completely agree with Helen and this blog is perfect advice. Instead of seeing it as an opportunity to buy unneccessary things rather try get all ones debt out of the way. As it will rise and drastically when one least expects it! Its inevitable. But on the other hand, it really is great that it is so low - but people need to really see it as a breathing space and take advantage in a sensible way.
Helen said:
on Friday 27-Jul-12 11:44 AM
As all South African Economists saying that now recent interest rates are the lowest in economic history of South Africa, I totally agree - if interest rates are going to go down even more as well as inflation - it will get to ridicules point and will start raising up. According the economic theory the Macroeconomic system is based on various circles, and I believe now is the right time to reduce our debts.
Johannesburg based attorney specializing in personal injury matters including Road Accident Fund claims and medical negligence matters. My interests include golf, reading and the internet and the way it is constantly developing. I have a passion for life and a desire for less stress!
