Mboweni's early "Monetary meeting"
Global conditions have changed thus a new course of action is required...
In the recent Financial Times on Tuesday, Finance Minister Trevor Manuel says the world was warned about the current global financial crisis. He followed with an explanation that historical records repeat themselves as confidence gives way to high spirits, panic is followed by decline and retrenchment comes before restoration.
Yet, he said, that for too long the world has allowed for an unexamined faith in market incentives to drive these normal social requirements into the shadows. Manuel said the world needed to acknowledge that the financial crisis could not be unwound without addressing global trade imbalances. Now, we need to take the actions required to build more balanced trade relations and earning patterns.
The latest financial news has drawn attention to the latest monetary policy meeting. Dramatic changes in global conditions have resulted in a rescheduling of the monetary meeting to an earlier date.
According to Reserve Bank governor Tito Mboweni the global conditions have changed dramatically which requires all of us in SA to examine a new course of action that may be required.
The monetary policy committee (MPC) will meet on March 23 and 24, this is ahead of the previously schedules April 15 and 16th, and after which changes will then be made at the month end from then on. The change in the date is in line with market expectations due to the deteriorating economic pressure and job losses. More meetings may come in May and June before a break in July.
Brait economist Colen Garrow has said that the only reason the SA Reserve Bank had called an early meeting was to announce a rate cut. He expected a cut of 100 basis points despite the bank still remaining tight lipped regarding the reason for the meeting.
More frequent MPC meetings are needed to take account of the rapid changes in both the global and economic financial environment. The changes in South Africa's economy need to be more closely monitored and a new outlook is to be created for inflation, growth and jobs.
We will keep you informed here at Justmoney.co.za regarding next week's meeting and will be sure to update you on our the latest rate changes and the course of action to be taken to keep South Africa out of a recession.