Yesterday, 16 January 2020, saw the SARB cut the repo rate by 25 basis points, to 6.25%.
The SARB is expecting inflation (CPI) for 2020 to be 4.7%. This is down from their previous 5.1%. They have also decreased their expectation for inflation in 2021, from 4.7% to 4.6%.
For many consumers and businesses this is a good thing.
However, the SARB also decreased their growth outlook (GDP) for 2020 to 1.2% from 1.4%.
The bank decreased the repo rate to stimulate growth – they are encouraging people and businesses to borrow, to spend more.
The above is not good news for businesses. It indicates that growth is expected to decline.
So, as much as it is good for inflation to come down, and rates to be decreased, it is a sign that things are going to be tough, and possibly get even tougher.
This scenario is not new – we’ve seen it before, and many business owners have lived, and survived it.
At The Alternative Board® we put like-minded business owners, from non-competing industries, in a seat at a roundtable peer-to-peer group that provides accountability, advice, and act as an alternative board of directors.
How is this relevant to the above news on interest rates and growth?
When we have two hundred years of experience around the same table, from different industries, bringing different perspectives, our experience in twenty countries is Shared Wisdom, Bottom Line Success.
You can’t blame anyone for you being in the same position this time next year. But you can be blamed for not joining a peer advisory board to benefit from Shared Wisdom, Bottom Line Success.