Understanding central banker speak (#551)

JSE Direct with Simon Brown

Central bakers have very few tools to achieve their mandates around inflation (and in some cases also protecting a currency and aiding GDP growth). Interest rates have a blunt lagged effect and their only other tool is what they say and we need to understand this central banker speak.

Last week it was the South African Reserve Bank MPC rate announcement that left prime unchanged for the first time since November 2021. The vote was close and the governor spent a lot of time saying they had not finished hiking, this was just a pause.

The Federal Reserve FOMC has been saying the same about pausing before more hikes.

But any hikes will surely be data dependent which is what they always say. So the threat of more hikes is central bak speak for don't get too excited.

Simon Shares

• Shoprite* (JSE code: SHP) trading update shows just why they are the best food retailer in South Africa, even probably the world. This as they had to spend R1.1billion on diesel for the 52 weeks. This will hurt margins, but they're still profitable.
• The Rand is on a tear, and this time it is not US$ weakness nor commodities booming. It's just good old fashioned people buying our Rand.
• Global luxury ETF, better than buying the watch
• Reducing tax on interest earned

* I hold ungeared positions.