SAMANTHA ENSLIN-PAYNE: Chill down the spine not as cold this time
So, in this fraught political climate, the Reserve Bank is a steady hand amid the mayhem
For those of us old enough to remember the horror of the 1998 interest-rate hikes, the past three weeks of political upheaval and ratings downgrades have raised the spectre of a sharp rise in rates. Looking this week at the gyrations on a graph tracking the prime lending rate since the early 1980s made me feel queasy. But now that the panic over South Africa's junk status has subsided somewhat, it seems a sharp hike in interest rates may not be inevitable. Note the words "sharp hike" - there may still be increases.Interest rates currently are relatively low compared to the earliest years of this century and the two-and-a-half decades before. Now the prime lending rate is 10.5% and the Reserve Bank's repo rate is 7%. So is anything different now from the 1990s that could mean rates won't spike to the same degree as in 1998 - when the prime lending rate shot up to more than 25% - if the currency tanks? Well, yes, quite a few things. In the 1990s, one of the Reserve Bank's aims was to ...
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