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SARB MPC escapes the ‘stagflationary’ vice-grip by appeasing both sides of the equation

18 July 2014

SA GDP growth is under severe downward pressure due to various well known factors. The Monetary Policy Committee (MPC) is very sensitive to this and thus did everything they could not to hike rates. By only hiking 0.25% they hope not to hamper economic growth.

The rate hike widely expected

18 July 2014

The rate hike of 25 basis points was fairly widely expected despite the fact that the economic growth forecast was reduced significantly from 2.1% to 1.7% for the year, along with lower longer term forecasts, since the last Monetary Policy Committee (MPC) meeting. The South Africa Reserve Bank also clearly stated that the lack of economic growth needs to be addressed by implementing the National Development Plan (NDP), and that there is therefore not much the MPC can do to save the growth rate in South Africa at this point.

From here to eternity in the age of low interest rates

17 July 2014

“L'éternité, c'est long ... surtout vers la fin.” ? Franz Kafka.

Slower should not mean never

17 July 2014

The South African Reserve Bank (SARB) has indicated it believes interest rates will need to be increased further. However, it has also suggested there is no urgency regarding hiking the rates. Deputy Governor of the Reserve Bank, Daniel Mminele noted during his speech at the SARB Financial Markets Department’s annual cocktail function on 24th June “… the current rate cycle need not match the speed and magnitude of earlier cycles”, partly due to the absence of material demand pressure on prices.

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