Money Morning Archive January 2009

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It’s official. South Africa’s spiralling inflation has finally turned – reacting to cooling prices on the back of lower oil and softer international growth prospects. On Wednesday, Statistics SA reported December CPI at 10.3%, while CPIX (inflation with the effects of mortgage interest stripped out) fell to 9.5%. This decline clears the way for the Reserve Bank’s Monetary Policy Committee to lower interest rates when they next meet on the 4th and 5th February. Economists say a half percent cut is a given – with many suggesting 1% is on the cards.

You know things are bad when you read constant reports comparing today’s crisis with the Great Depression - and you don’t even look twice. We all know by now that a good chunk of the world’s banks are as good as bust. And like it or not, the governments of the world have decided to step in and ‘save’ them, and the rest of us, with “stimulus” packages.

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