Interest rate not likely to be cut
THIS year's first meeting of the Reserve Bank's monetary policy committee will be held from January 18 to 20 and experts expect interest rates to be left unchanged
At its last meeting in November the MPC reduced the repo rate by 50 basis points to 5,5 percent. This brought the total reduction in the repo rate to 650 basis points since December 2008.
As a result of this significant easing of monetary policy, the prime lending rate of banks is now at its lowest level since 1974.
Senior economist at Momentum, Sheshi Kaniki, said while predictions are seldom easy, a good starting place was to ask what factors contributed to MPC decisions made during 2010.
"Last year the MPC cut the repo rate by 50 basis points on three occasions - in March, September and November," Kaniki said.
"Similarly, at three of their meetings - in January, May and July - they made the decision to kep the repo rate unchanged."
He said four main factors were at play at these 2010 MPC meetings.
"CPI inflation was falling faster than anticipated . providing greater scope to reduce the repo rate."
The current trend starting to emerge is in the opposite direction.
"According to Statistics South Africa (StatsSA), CPI inflation increased to 3,4percent and 3,6percent in October and November.
"While these figures are still comfortably within the inflation target the current direction is less supportive of a rate cut," Kaniki said.
"The fragile domestic recovery (also) required that the Reserve Bank provide further stimulus to the economy through lower interest rates."
Kaniki said recent data suggested economic recovery is continuing.
He said the National Credit Regulator (NCR) reported that the number of consumers with impaired credit records fell in September 2010 for the first time since December 2007.
"Given these positive trends, the Reserve Bank may decide to wait for the recent rate cuts to continue working through the economy rather than reduce the repo rate again at its first meeting," Kaniki said.
He said at the time of the last MPC meeting the Reserve Bank anticipated that international oil prices would not increase significantly due to weak global economic conditions.
But, the price of Brent crude oil has surged dramatically, with some analysts suggesting it could reach $100 (R691) a barrel in coming months.
"The petrol price has increased by 66 cents since October 2010. In light of this, the MPC may decide to hold the repo rate unchanged until greater clarity is obtained during the year."
Anonymouse123
Free advise if you want to survive 2011 :Inflation, with the possible exception of rising oil prices (if you want to call that part of inflation), is really a hidden tax and not a natural phenomenon. It is the constant DEVALUATION of national currencies by well established banking cartels which leverage control over national governments. This gives the false appearance of goods being more expensive because the currency is worth less goods. Even goods in no way related to oil prices. ONE of their methods of devaluing currencies is by creating over supply of currency by overprinting notes (a.k.a. toilet paper). If this form of inflation (which is not oil related) really was a natural phenomenon like we get told, we would also have just as much deflation - as per the law of averages. We do not.
The bankers further financially enslave us with their economist's jargon WHICH DOESNT VARY THAT MUCH FROM ECONOMIST TO ECONOMIST. They tell us that they are unfortunately forced to lift interest rates to help "curb" the very inflation that they cause in the first place. They therefore get even more hidden tax from us. When the golden goose is almost dead, they quickly tell us that all those interest rate increases have started working and now inflation is under control, which it very well might be - SO WHAT ! So they then lower interest rates a little to let us recover a little. Just as the golden goose starts laying more golden eggs again and starts recovering from their exploitation they then start the whole process again of causing inflation (tax) to go higher and higher until once again they say they have to lift interest rates. So we are caught in the trap going back and forth between high interest rates and inflation - BOTH JUST HIDDEN TAXES AND GIANT SCAMS OF THE BANKS.
Stop using their paper money as much as possible and trade with anything else you can lay your hands on that isn’t (toilet) paper money. We should encourage people to invest in gold and silver coins that arent subject to inflation. Trading in silver coins on a day to day basis would be even better, but not many traders accept silver coins. Even if saving for only a few years krugerands wont experience inflation.
Inflation from oil seems to be caused in a similiar way. Many not fooled by their propaganda have suggested that crude oil is not nearly running out geologically according to some studies, but simply that the supply is controlled by the miners (OPEC) and the refiners (middle men/oil companies, eg. BP, Shell, etc). This artificial limiting of the supply pushes up prices because the demand is still the same or higher. The inflated oil prices pushes up petrol and diesel, which in turn pushes up food prices and that of other goods that need to be transported. The answer for petrol car users - go electric. The answer for food prices - wait for supermarkets to go electric. Food price increases due to global warming's climatic conditions destroying crops is only a part of the story. Don’t be fooled !!!!!!
Currency inflation cause by banking manipulations are just as bad as oil manipulations and we should stop using their paper money and trade with anything else you can lay your hands on that isn’t (toilet) paper money. The last thing we should be encouraging out children to do is save paper money in the bank. Teach them top rather purchase Krugerands.
Try : http://www.ces.org.za/ free for trading systemns other than gold, than also doesnt experience inflation.
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whitedudesadvice
Politics is controlled by economics (money). Money drives the media, money drives politics, people are influenced by the media, and we have modern democracy. High interest rates are not the only way to reduce inflation because inflation is not a natural phenomenon. Inflation is NOT caused by too much economic growth, etc, etc, like we get told. How can economic growth cause your money to be worth less ? Economic growth just makes inflation less noticable. If you continue believing the status quo, you will continue to get poorer. Raw materials and metals, hard assets cannot be manipulated by the paper money printing press. It cannot be manipulated by banking manipulations. Force banks to charge fair interest rates (eg. 1% or less), stop them from to lending to those who cant afford loans, monitor the amount of paper money they print and force them to back notes up with metals to control inflation. Then there will be no "housing bubbles" or need to "control" inflation.Report Abuse
whitedudesadvice
Concerning oil start google searching cheapest electric cars. Also get an eskom rebat and pay off a solar geyser.Report Abuse