"Consumers have been cheered by lower fuel prices and we are seeing lower inflation on the horizon. We can expect further reductions in fuel prices and inflation during February, but this does not mean we should throw caution to the wind," advises FNB CEO, Jacques Celliers.
"Borrowers now have an open window of opportunity to reduce their debts as lower prices offer an instant cash boost. We should, however, bear in mind the guidance given by the Minister of Finance in his Medium Term Budget Policy Statement regarding the possibility of changes to tax rates in 2015. For this reason, people should stay within their budgets," says Celliers.
"The SARB kept rates unchanged at today's meeting in line with expectations. The MPC of the SARB has increased the repo rate by a cumulative 75 basis points to 5.75% since January 2014. For most of 2014, the SARB emphasised the need to gradually normalise interest rates in order to combat the inflation risks posed by a weak and vulnerable rand," says Sizwe Nxedlana, chief economist at FNB.
"However, following the 55% fall in the oil price since the third quarter of 2014, risks to both the inflation and exchange rate outlook have diminished. It will be extremely difficult for the SARB to justify any interest rates increases in this disinflationary environment. As a result, we expect the SARB to keep rates unchanged for the duration of 2015."
