Hi Francois

What are your interest rate expectations for the next few years?

I’m especially interested in rate estimates till September 2011.

Regards,
Zafreen

Hi Zafreen

I wish I could say with certainty what will happen with the economy, inflation and interest rates over the next two years, but unfortunately the best I can do is make an educated guess.

I expect the economy to slowly start recovering from the recession we’re currently in, during 2010, and more rapidly during 2011.

With the recovery and accompanying economic growth, I expect inflation to pick up again, probably during the second half of 2010.

To combat inflation, the SARB will need to hike interest rates.

I therefore expect the repo rate and prime rate to remain at round about the levels they are now, for the next year or so, and then to start rising again during the second half of 2010 and more rapidly throughout 2011.

Please remember that I’m not a fortune teller.

My predictions may be wrong.

Kind regards,
Francois

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