Dear Reserve Bank: Please be gentle with us
Please dissuade your monetary policy committee from raising rates today.
I know they are concerned about the long-term consequences of the interest rate differential between us and other economies, especially the US. But it doesn’t look as if the US is going to be as aggressive in raising rates as it did at your last meeting.
It was a close call at the last MPC - four of your members voted for rates to stay flat, three for an increase. I expect you are having equally robust discussions at this meeting.
Also the oil price has dropped from the mid $80 range to close to $60 a barrel and the rand is moving stronger. That’s got to help bring down inflation in the new year.
I know inflation has been ticking up and the IMF would like CPI closer to 4.5%, but this economy needs every bit of help it can get.
It’s been a terrible year for the economy as you know. We’ have been in recession for most of this year and it’s been awful. We’re not creating jobs and optimism levels are low.
I know it’s not your job to be a country cheerleader, but a rate hike now, even a small, symbolic one, might just shake any bit of fragile confidence consumers are clinging to.
You have more information than the rest of us and know how best to interpret it. It would be nice though, if you could ask your colleagues to be gentle.
Oh, and while you are up talking rates today, please advise people not to go mad on Black Friday.
Note to readers
The Reserve Bank will decide by 3pm whether it will raise rates at this meeting or not. It seems highly unlikely that the SARB will move at this meeting, despite the mixed signals the market is sending.
The bond market is signaling rates will stay on hold, the yield on the R186 government bond index dropped as low as 9.03% on Wednesday, a strong indicator that lenders believe rates will not move. A recent bout of rand strength implies currency speculators believe rates will rise by 25 basis points.
Bruce Whitfield is a multi-platform award winning financial journalist and broadcaster.
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