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South Africa Interest Rate

 
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South Africa Raises Rate to 5.75%

At its July 17th meeting, South African Reserve Bank decided to raise the repo rate by 25 bps to 5.75 percent as inflation has breached the upper end of target range. Excerpts from the statement by Gill Marcus, Governor:Since the previous meeting of the Monetary Policy Committee, the economic growth outlook has deteriorated against the backdrop of protracted strike action in the mining and manufacturing sectors.

The economy contracted in the first quarter of 2014, and the growth outlook for the rest of the year remains subdued amid low business confidence. Compounding the MPC’s policy dilemma, inflation has breached the upper end of the target range, driven primarily by the exchange rate depreciation and rising food prices, while a possible wage-price spiral resulting from recent wage settlements and wage demands considerably in excess of inflation and productivity growth have added to the upside risk to the inflation outlook.  The MPC is also increasingly concerned about the inflation outlook, and the further upside risks to the forecast. Although the exchange rate remains a key factor in this regard, the possibility of a wage-price spiral should wage settlements well in excess of inflation and productivity growth become an economy-wide norm has increased.

Although the inflation trajectory has not deteriorated markedly since the previous meeting, upside risks have increased, and it is expected to remain uncomfortably close to the upper end of the target range when it does eventually return to within the target. The upside risk factors make this trajectory highly vulnerable to any significant changes in inflation pressures. The MPC is, however, cognisant of the fact that the inflation pressures do not reflect excess demand conditions in the economy. Household consumption expenditure remains weak, and credit extension to households is contracting in real terms. However, we do have to be mindful of second-round effects of supply side shocks. 

We would like to reiterate that monetary policy should not be seen as the growth engine of the economy. The sources of the below par growth performance are largely outside the realms of monetary policy. In the short term, an improvement in the interaction and relationships between management and labour is essential to foster a climate of trust and confidence, and get South Africa back to work. Given that the key headwinds preventing a return to trend growth are structural, there is an urgent need to implement necessary structural reforms, as envisaged in the National Development Plan, in order to achieve higher and more inclusive growth.


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Commercial Finance

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The term commercial property (also called investment or income property) refers to buildings or land intended to generate a profit, either from capital gain or rental income
Commercial real estate is commonly divided into six categories:
1. Office Buildings – This category includes single?tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.
2. Industrial – This category ranges from smaller properties, often called “Flex” or “R&D” properties, to larger office service or office warehouse properties to the very large “big box” industrial properties. An important, defining characteristic of industrial space is Clear Height. Clear height is the actual height, to the bottom of the steel girders in the interior of the building. This might be 14?16 feet for smaller properties, and 40+ feet for larger properties. We also consider the type and number of docks that the property has. These can be Grade Level, where the parking lot and the warehouse floor are on the same level, to Semi?dock height at 24 inches, which is the height of a pickup truck or delivery truck, or a Full?dock at 48 inches which is semi?truck height. Some buildings may even have a Rail Spur for train cars to load and unload.
3. Retail/Restaurant – This category includes pad sites on highway frontages, single tenant retail buildings, small neighborhood shopping centers, larger centers with grocery store anchor tenants, “power centers” with large anchor stores such as Best Buy, PetSmart, OfficeMax, and so on even regional and outlet malls.
4. Multifamily – This category includes apartment complexes or high?rise apartment buildings. Generally, a fourplex or more is considered commercial real estate.
5. Land – This category includes investment properties on undeveloped, raw, rural land in the path of future development. Or, infill land with an urban area, pad sites, and more.
6. Miscellaneous – This catch all category would include any other nonresidential properties such as hotel, hospitality, medical, and self?storage developments, as well as many mor

 


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Fiscal Policy

Government spending policies that influence macroeconomic conditions. Through fiscal policy, regulators attempt to improve unemployment rates, control inflation, stabilize business cycles and influence interest rates in an effort to control the economy. Fiscal policy is largely based on the ideas of British economist John Maynard Keynes (1883–1946), who believed governments could change economic performance by adjusting tax rates and government spending.To illustrate how the government could try to use fiscal policy to affect the economy, consider an economy that’s experiencing a recession. The government might lower tax rates to try to fuel economic growth. If people are paying less in taxes, they have more money to spend or invest. Increased consumer spending or investment could improve economic growth. Regulators don’t want to see too great of a spending increase though, as this could increase inflation.

Monetary Policy

The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Monetary policy is maintained through actions such as increasing the interest rate, or changing the amount of money banks need to keep in the vault (bank reserves). If the money supply grows too fast, the rate of inflation will increase; if the growth of the money supply is slowed too much, then economic growth may also slow.

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When do Banks repossess

A bank can repossess your vehicle when you’ve stopped making the monthly payments agreed upon in your financing arrangement. Most banks will begin the repossession process after you’ve stopped making payments for 60-90 days. They may attempt to contact you by standard mail, certified mail, or telephone. Being unable to meet your monthly payments can be a stressful and an embarrassing experience. Remember that there are options available to you if you’re having trouble. Contact Autorefin Vehicle and Asset Finance (AVF) with any questions about an existing loan you’re carrying, and we’ll help you work out a solution that fits your budget. Sometimes it just takes a couple of months to get back on your feet.