Ron Derby | The Reserve Bank’s decision to hike or not to hike interest rates is most acutely felt in this segment of society, people who are first-time home or vehicle buyers and more often than not, credit card holders.
. For the poor, an interest rate decision does have some level of effect on the price of basic foodstuffs such as bread. For the one percent, it’s nothing more than a little irritation.
Load-shedding, higher administrative prices, rising school fees and an unemployment crisis have zeroed in on South Africa’s middle class, denting their confidence levels as it eats into the disposable income. It’s fed into our weak growth prospects because consumption makes up a fair chunk of this economy given that our industrial sector continues to shrink.
Well, that’s my case for a reprieve-nyana, which will no doubt annoy a number of market participants especially in London and New York and they’ll let it be known in the rand’s performance. That being said, a surprise is not in the offing It’s just how capital markets work and why people are thinking of a different future, one without the US dollar as the reserve currency.
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