South African consumer inflation accelerated more than expected in May, boosting chances the Reserve Bank might start lifting interest rates before the end of the year rather than early in 2012.
Government bond yields retreated, with the yield on the four-year issue rising to 7.49 percent from 7.445 percent prior to the release of the CPI numbers at 0800 GMT.
May inflation came in at 4.6 percent year-on-year from 4.2 percent in April, Statistics South Africa said, and also quickened to 0.5 percent month-on-month from 0.3 percent, the main drivers being accelerating food and fuel prices.
22 June 2011
Rate Hikes Sooner Rather Than Later?
Rate increases loom as inflation quickens
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9 comments:
Capital confiscation via Inflation.
How lovely.
Those printing presses are running at full throttle.
Debt monetization at its' best.
Isn't electricity going up in July?
Tick tock, tick tock...
When inflation gets to around 7% I expect the Prime rate will have started to increase.
Prime interest is almost always at least 2% greater than the CPI rate.
That is linear thinking.
There will be no rate hikes, bitches!
If anything there will be rate cuts, as and when the massive deflationary cycle takes a grip.
They are going to do everything they can to try and keep the economy afloat
Anonymous 3
According to the statistics the GDP grew at 4.8% in the first quarter of 2011.
So the SARB might be more inclined to hike rates than you think
L.S.
@anon 4. Ever heard of stagflation. Despite weakness in global markets there will be no rate cuts. You are dreaming..."bitch"
Have a look at this, would indicate interests rates are going up worldwide and we won't be able to avoid it.
http://www.bbc.co.uk/news/business-13922857
At anonymous 5.
I have heard of stagflation and know what it means too. Basically it is an economic situation characterised by stagnant economic growth (or lack thereof) combined with inflation.
As per my last post the economy is growing and this is reinforced by the recent raising of the growth forecast:
http://www.southafrica.info/business/economy/imf-200611.htm
So the economy is not stagnant. It may have a backlog of employment to create but it is growing. Bear in mind that housing is a lagging indicator i.e. it is one of the last things to recover following a recession.
All the while the SARB is sounding ever more hawkish about the inflation rate that is ticking up.
It matters not to me whether it is rising inflation that decreases the (real) price of housing or if an increase in the interest rate pushes up the cost of money and thereby depresses demand for housing bought with borrowed money.
And while I could go into the causes of stagflation or even why SA is out of step with the world economy, it's not my job to educate you.
I do however agree with you that there are unlikely to be any rate cuts unless there is a major economic shock. Of course if there is a major economic shock then that's not exactly going to help house prices either.
So while it is easier to insult people names on the Internet than to their face it seems that is still hard to know what you are talking about...
L.S.
Anyone who has to pepper their point with profanities like "bitches" has already lost an intellectual argument because they are at the distanct disadvantage of lacking credibility.
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