It is heritage week this week. Due to this the regularly scheduled meeting of the people who decide the interest rates has been moved forward. The Monetary Policy Committee from the Reserve Bank normally meets on a Wednesday and Thursday, releasing the interest rate decision late on Thursday afternoon. The MPC is meeting on Monday and Tuesday 21st and 22nd September 2009 this time around. This may not give them enough time to look at the latest data from Statistics South Africa. So what does the MPC look at?
- Deals with price stability
- This is essentially inflation
- Inflation data only comes out on Tuesday 22nd
The MPC as one of the most well known and empowered arms of the Reserve Bank is mandated to carry out the Reserve Bank mission of price stability. Price stability is basically the inflation measures, which tell us how fast prices are changing. The CPI of consumer price index figures only come out on Tuesday morning, by which time the MPC should have got through the majority of its business already. PPI or producer price inflation data will only be released the day after the MPC reports its decision. So can we expect any change in light of this?
If the main measures of price stability are only publicly released after the MPC meeting we can only hope that Statistics SA gives the Reserve Bank this data early in order for them to factor it into the MPC decision. In a recent survey of economists the call was for no change in the interest rates, this could be because it is unlikely that all of the relevant data will be available beforehand. The economy is not out of the doldrums yet and a rate cut could spur more spending, but an unchanged rate cut or even an interest rate rise could help to encourage more saving, standing us in better stead in the longer term. Either way plan a budget now in order to know where you stand.