Another cheer for people in South Africa today! The South African Reserve Bank’s (Sarb’s) monetary policy committee (MPC) has cut the key repo rate by 100 basis points, bringing it down to 9.5%, with the prime lending rate dropping to 13%. This rate cut takes the cumulative cut since December 2008 to 250 basis points. Many economists had predicted this 100 basis point cut today and they expect another 100 basis point cut in April.

Some of you may wonder why these drops are occurring so regularly when in the past the MPC did not meet as often. The committee announced on March 18 that it would be changing meeting dates for the rest of 2009, with the committee meeting every month, except for July.

Reserve Bank governor Tito Mboweni said that the decision to cut rates was based on an improved medium-term outlook for inflation and the volatile global environment.

An emergency meeting by the Monetary Policy Committee should spell one thing – Interest rate cut, in light of the recession we are in marked by an increase in inflation, GDP pointing south and a shrinkage in the mining and manufacturing sectors of the economy.
Anticipation is rife for a 1% decrease in the interest rate which should aid in fine tuning the wheels of the country’s economy but at grass roots level what does a 1% decrease in interest translate to?

If you are like me and live in a borrowed house and drive a borrowed car (need I go to the very clothes on my back?) a 1% reduction makes me sigh in relief as this means a couple hundred rands in my back pocket. Reason calls me to keep paying the mortgage at the current rate as this will reduce the tenure of the borrowing but the thought of lining my stomach with a prime matured steak and other luxuries I had relegated to better times . Instant gratification vs. a sound investment move, maybe wisdom will prevail the next time we get another rate cut possibly mid April?

The stock market ended the week on a high, with a high likelihood that it could be interest rate induced I guess we will watch and see what happens after today`s extra ordinary meeting.

The Coca-Cola Co. (KO) said Friday that it would invest $2 billion in China over the next three years.

That’s 25% more than the $1.6 billion Coke has invested in China during the past 30 years.

As Coke’s third largest market – trailing only the United States and Mexico – China is already a centerpiece of the company’s global growth strategy. When the company announced better-than-expected fourth-quarter results last month, it reported that China jumped 29% last year, while U.S. sales actually fell by 1%.

So it’s no surprise that China will overtake both Mexico and the United States to become the company’s largest market by 2018, Coke President and Chief Executive Officer Muhtar Kent  told The Financial Times.

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