Isn’t it amusing to see the mainstream media and analysts froth about Tito Mboweni’s announcement of a 50 basis point interest rate hike smack, instead of the 200 point hammering he had threatened?
Isn’t it obvious that our image-mad money boss had been sabre-rattling to scare the consumer audience that bears the main brunt of these rate hikes, so that no-one would complain when he announced a slightly smaller increase?
And isn’t it equally obvious that his tactic backfired? He came under heavy fire from every quarter (or should that be every 25 basis points?), with this blog also contributing a tiny pea-shooter to the assault. In the end, a 50 point hike seemed to be a massive compromise, on the one hand pulling back from what was seen as his insensitivity to the economic conditions facing consumers and business, and on the other hand still being tough enough to keep the rate hikes coming.
The bleating from the analysts is not only unbecoming, but also comes across as amazingly naive. “Disbelief, confusion, anger” (according to Business Day)? What is this: a school PTA suddenly discovering the reality of porn/drugs/Facebook/insert-current-panic-here in the schoolyard? Or nursery school kids whining that they didn’t get the sweeties they wanted (i.e. being proven correct in their confident forecasts for a 100 points rate hike)?
Even leaving his research into Machiavelli aside, it appears that Tito has finally found the right calculator — the one that tells him that not all blame for inflationary pressures can be laid at the feet of the consumer. If even in the massive economy of the United States, it is so obvious that inflation is partly fuelled by fuel prices (see the CNN Money article, Oil prices drive inflation), how could we miss it in our easily-buffeted economy?
Through endless economic theorising, of course, but also because we tend not to see the wood of daily reality for the trees of broad economic trends.
Perhaps Tito bought a new calculator. Perhaps he got out among the ordinary public a bit more, now that the paparazzi has been banned from his presence. Perhaps common sense is back in fashion.
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