We need Trader Vic for Reserve Bank governor

[Dave A]

Tito Mboweni certainly can't be accused of being bold or reckless.

South Africa's central bank monetary policy committee (MPC) could meet again on interest rates before its scheduled April meeting, depending on economic growth and other data, Governor Tito Mboweni said on Friday.

The MPC cut the central bank's repo rate by 100 basis points on Thursday, the biggest adjustment in five years, and Mboweni hinted that he had wanted an even bigger reduction, raising expectations of more big cuts to come.

Inflation in Africa's biggest economy is slowing sharply, while worries are mounting about growth.

Consumers are under strain from still high rates, with retail sales falling, new vehicle sales plunging and manufacturing -- the economy's second biggest sector -- in recession.

"There is going to be data coming out towards the end of February and also mid-April, and if that data indicates that the MPC must meet, we might actually meet before the next scheduled meeting," he said in an interview with CNBC Africa, referring to fourth-quarter economic growth data on February 24.

The economy expanded by just 0,2% in the third quarter of 2008, a decade low, and some economists have warned it may be heading for contraction.

"The problem is that some of the quarterly data was not available to us now ... and if that quarterly data indicates a picture different to what we think will be the case, we might need to meet," Mboweni said.
full story from M&G here

But I can't help think back to Trader Vic's call for a 2% interest rate increase way back in October 2006. A bold move then would probably have saved our economy a lot of the pain it has suffered under Tito's slow strangulation approach.

Now, once again, we see Tito fiddling whilst Rome SA burns. There are times when you need to be boldly proactive, sir. Now is one of them.

[Graeme]

Did Trader Vic call for an increase or a decrease?

[Dave A]

Increase - in October 2006.

The point then and my point now is there are times when the Reserve Bank needs to get pro-actively ahead of the markets and not just be reactive.

[Dave A]

This story gives support to the idea that Tito and co. are being rather tardy in bringing rates down.

Rate cuts abroad have paved the way for stock market recoveries but in South Africa interest rates remain relatively high.

Despite the recent interest rate cuts, local real interest rates - nominal rates minus inflation - rose since late 2008. Although borrowers focus on nominal interest rates, real rates influence monetary policy and currency movements.
full story from Business Report here

That is if inflation is the sole arbiter of rates as claimed.

[Frankincense]

I've seen Reserve banks purposefully behave re-actively, or delay wisdom to ensure their people have troubles that could have been avoided, so they are plunged further into debt, which suites the Reserves better in the long run...I don't expect any changes soon...

In Africa's large growing economy...I expect the encouragement of flesh to overspend while the reserve controllers know what's coming(and so leave rates low), so that once it's arrived/activated, they cannot be held accoutable as was an "unforseeable miscalculation" and people all look to the same for salvation...(yet the jokes on us) Surely this cannot be the case?


...and He's got Trevor saying "Focus on extracation my children"...

Imagine fuel is at 120$ a barrel and we paying R10/L ...then oil drops to 40$ a barrel and we paying R5/L ...then it remains at 40$ a barrel, but we on R7/L already?

Some things just aren't meant to be....

[Graeme]

In the Business Section of most newspapers you will find a breakdown of how the current petrol price is made up: refining, transport to the bowser, various expenses and a host of taxes. I have always preferred taxes to be paid by the user of a particular commodity or thing, than to have it just added on to personal income tax - the sound principle of "user pays".