On Thursday 13 August 2009 the reserve bank took markets and analysts by surprise by cutting the repo rate by 50 basis points, this was the 6th interest rate cut since December 2008. Despite yesterday’s announcement, FedGroup have assisted participation bond investors by increasing rates paid by 1% with immediate effect. The FedBond Fund currently offers 9.5%.
“While the Governor’s announcement benefits the greater South African consumer which assists in alleviating the current financial strain, investors and pensioners who rely on interest income remain hard hit. The interest rate offered by participation bonds has traditionally been equal to the repo rate, this has seen these investors and pensioners earning almost half as much as did eight months ago. In order to alleviate some of the strain on investors and pensioners, FedGroup have launched the Super Care rate which offers all Participation Bond investors an additional 1%p.a.” says Scott Field, FedGroup Operations Manager
Get the latest issue of FAnews