SA gets another interest rate hike

The rand traded 2% firmer against the dollar, at R15.32 at 15h30 on Thursday.
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Is it due to an increase in the interest rate?
 
LaraC said:
If the economists are right there will be another two this year.
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Damn that will be nice :) Guess for some people not... but pensioners who rely on earning from their savings it's a good thing.

Where's MickeyD ?
 
ToxicBunny said:
Doubtful.. this has more to do with the political stuff going on in my opinion.
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I thought it was only negative political publicity going round. What happened to turn the tide?
 
LaraC said:
Is it due to an increase in the interest rate?
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The strengthening of the ZAR was more to do with Fed Chair Janet Yellen announcing that the outlook for interest rates in the US is going to be unchanged for the foreseeable future. It caught markets off guard, but was generally welcomed.

The ZAR/US$ improved by almost ZAR 1.00 to the US$. (Now US$1 = ZAR15.1640)

http://www.ibtimes.com/fed-meeting-...s-steady-settles-lower-longer-outlook-2337880
http://www.cnbc.com/2016/03/16/yellen-just-gave-stocks-the-green-light-strategist.html

By cutting the outlook for rate hikes this year, Fed Chair Janet Yellen just put a fire hose to the volatility, says one Wall Street strategist.
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In a news conference Wednesday afternoon Yellen said global economic and financial developments continue to pose risks to the U.S., and revised down her path for further interest rate increases.
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Yellen's comments sent stocks higher Wednesday as the CBOE Volatility index, commonly referred to as the market's fear gauge, hit a year-to-date low early in the session. The S&P 500 is currently tracking for its first positive month since November.
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This is another poor decision by the SARB. The risk of rising interest rates in an economy which is depressed is stagflation.

What is 'Stagflation'?

A condition of slow economic growth and relatively high unemployment – economic stagnation – accompanied by rising prices, or inflation, or inflation and a decline in Gross Domestic Product (GDP). Stagflation is an economic problem defined in equal parts by it’s rarity and by the lack of consensus among academics on how exactly it comes to pass.
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Usually, when unemployment is high, spending declines, as do prices of goods. Stagflation occurs when the prices of goods rise while unemployment increases and spending declines. Stagflation can prove to be a particularly tough problem for governments to deal with due to the fact that most policies designed to lower inflation tend to make it tougher for the unemployed, and policies designed to ease unemployment raise inflation.
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https://en.wikipedia.org/wiki/Stagflation
http://www.investopedia.com/terms/s/stagflation.asp
 
McT said:
The strengthening of the ZAR was more to do with Fed Chair Janet Yellen announcing that the outlook for interest rates in the US is going to be unchanged for the foreseeable future. It caught markets off guard, but was generally welcomed.
/snip
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Thank you. Very insightful. :)
 
This was quite an interesting opinion in a letter addressed to the SARB by Brian Kantor (chief economist and strategist, Investec Wealth)

Brian Kantor knocking on SARB’s door – worry about economy, not inflation

The problem for the Reserve Bank and the economy is stagflation: slow growth and rising inflation. Very little of the pressure on prices and the inflation rate is coming from the demand side of the economy – for which higher or lower interest rates are the obvious remedy.

Prices may rise for supply side as well as demand side reasons. Less supply and so upward pressure on prices is the result of a drought that has reduced agricultural output and is pushing up food prices. Upward pressure on prices is also coming from higher taxes on goods and also from the higher prices charged by our publicly owned utilities with monopoly power to charge more. Most important are the higher consumer prices that are following higher rand prices paid for import goods and services, including oil and now higher prices to be paid for imported grains. The recent trends in global food prices have become very unfavourable for South Africa recently as the Reserve Bank shows in its latest Bulletin. The global food price index- converted into rands has risen sharply as may be seen – as South Africa becomes a net importer of staple foods.
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Source: BizNews
Link: http://www.biznews.com/sa-investing...cking-sarbs-door-worry-economy-not-inflation/
 
They can keep hiking interest rates all they want. All they do is really delaying the inevitable. The imminent SA economy collapse. Will happen when (Not IF but when) Moody's downgrades us to junk. ZAR 20.00/$ will definitely happen this year. Mark my words!

There's absolutely nothing we can do about it. History will hold the ANC responsible for everything, not Zuma. The ANC knew what was in store for us when they backed Zuma over Thabo 10 years ago.
 
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