Today there are many people interested in the interest rate decision of the Monetary Policy Committee (MPC). An important question is “who makes this decision (about interest rates) and what are their interest”. Many South Africans have higher repayments on loans that are choking their personal cash-flows. Some people may be hoping for a Christmas present, but is Tito Mboweni father Christmas? Many of the fundamental functions of the economy are linked to the interest rate and it is in government’s best interest to control this function of the countries economy. Government does this by providing a mandate for the reserve bank.

The South African reserve bank (Governor Tito Mboweni) has a mandate to keep inflation lower (between 3 and 6 percent). An average man would think that the mandate should be changed to “lower interest rates” or think that the reserve bank is against them. Certainly the bank looks out for the interest of the economy. They do this by a number of functions which can be found on their website. These include determining the interest repurchase rate. This is a tool that controls consumer spending, because the lower the interest rates the more consumers borrow and spend. This spending is money coming into companies and impacting the economy. As inflation has risen the MPC has raised rates since April 2005. WE EAGERLY AWAIT TODAYS VERDICT.

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