And up we go

[icyrus]

No, I think the Mboweni dude is one of the few that do know what cooking. The credit act is designed to curb irresponsible credit granting, not credit grant on the whole. I'd guess the increase is meant to reduce inflation, which is above the 3/6 bracket.

Have previous hikes been shown conclusively to reduce inflation?

 

[BTTB]

Mboweni said:

* Market turbulence has subsided somewhat;
* There are signs the economy is responding to rates;
* The risk to inflation outlook persists;
* Deterioration in inflation is forecast, but that it is modest;
* CPIX to peak in Q1 2008;
* CPIX to drop to 5,2% by the end of 2009;
* CPIX will average 6,8% in Q1 2008;
* Inflation risks remain on the upside;
* Inflation will decline over time;
* Oil and food cloud the inflation outlook;
* The rand has moderated the impact of oil and food;
* Longer-term food outlook is promising;
* There are signs of consumer spending moderating;
* There are tentative signs of credit restraint;
* There has been evidence of a slow-down in growth;
* The level of growth is around the potential rate;
* The rand shows a degree of resilience;
* The current-account gap is easily financed;

 

[GougedEye]

Have previous hikes been shown conclusively to reduce inflation?

Pretty much yes. Though it's not always an exact science. Rate hikes are the principal means used by all central banks to reduce inflation.

 

[noxibox]

Have previous hikes been shown conclusively to reduce inflation?

Not really no.

Although it is a common strategy to raise rates there is debate as to whether it really works and even if it does work whether it is actually the best strategy.

You'll also see a lot of economists referring to the central bank having to do something to remain credible. In other words they can't do nothing, so they'll do something, and they'd do it even if they knew for a fact it wasn't going to work.

 

[noxibox]

I just feel that Government should have introduced The NCA several years ago and we may have avoided the credit urge

The government has been slack in giving incentives to build capacity in this country. Credit would not have been a problem.