Tuesday, October 14

Inflation bias overestimates CPI

comparison with other countries indicates that South Africa's consumer inflation rate may be over-estimated by between 30% and 50%, according to research by Standard Bank economists

What does this mean? The Rand is the strongest performing currency against the dollar in the world at the moment. One of the reasons is the massive influx of foreign capital into South Africa to take advantage of our higher interest rates.

If true, it would indicate that a massive drop in the prime interest rate is called for. (currently at 13.5%) Effect? The rand will suffer in relation to the dollar, manufacturers will be happier, and there will be more money in my pocket each month as I pay less to the bank. Talk about good news. If only they're right.

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