By Cees Bruggemans, Chief Economist FNB.

SARB Governor Marcus today announced no change to interest rates, following a two day meeting of the Monetary Policy Committee.

Though there was a tremendous change in presentation style, there was none in policy substance.

The Governor presented her MPC team upfront and it was clear that wide-ranging discussions had taken place to come to the policy decision that was unanimously taken.

Thus there is a clear sense of institutional continuity that no doubt will be widely welcomed by financial markets.

As to the actual decision of leaving interest rates unchanged, it very much focused on the level and behaviour of inflation over the coming year, and the risks to this outlook.

The Governor described CPI inflation as likely hovering around 6% through the coming two years, probably just with the 3%-6% target zone, going by the MPC statement.

The Governor repeatedly emphasized

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The report below comes courtesy of Nouriel Roubini’s team of analysts at RGE, taking a look at some recent monetary policy trends in advanced economies. This content is excerpted from a longer piece, “Global Monetary Policy Review,” which includes in-depth analysis of when the world’s emerging markets might shift interest rate strategy. However, the longer piece is available only on a subscription basis.

Last week was a busy one for the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE). Policymaking is tricky when different asset classes are sending very different signals about the economy. However, those different signals are themselves a byproduct of policy. In the US, bond markets are discounting a sluggish U-shaped recovery or even a double-dip recession, while risky markets are signaling a strong V-shaped recovery ahead. Which is right? While RGE leans towards the

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By Natasha Brereton LONDON -(Dow Jones)- Bank of England Governor Mervyn King said Tuesday that heightened regulation can’t prevent the financial speculation that results in bank failures, and called for a serious review of the structure of the banking sector whose goal would be to eliminate institutions that are too important to fail. In a speech to business people in Scotland, King championed the idea of separating banks’ utility functions as a means of minimizing the government’s effective subsidy of risky activities and reducing the U.K.’s reliance on a small number of very big banks. Turning briefly to the economy, he noted that there was likely to be “significant” fiscal tightening in the years ahead, and stressed the need to boost broad money growth, but gave no clear indication on whether he would favor extending the bank’s bond buying policy. “The sheer creative imagination ...

By Cees Bruggemans, Chief Economist, FNB

The goal posts, they are a-moving (paraphrasing Bob Dylan about the changing times he lived in).

If we take for granted that the SARB prefers a constant real interest rate over time as a stability anchor for the broader economy, what else gives?

Mostly inflation, output gap and feedback loops from the firming Rand (these past six months, but especially the next 12-18 months).

CPI inflation was 6.7% but is this week expected to drop to 6.3% (or lower). That gives an inflation gap of 6.3% minus 4.5% (midpoint target range) equals +1.8%.

The inflation forecast for 4Q2010 is a moving feast. For the past year most observers have been punting 5%. But that has been eroding in recent weeks towards 4.5% (or even lower). And to this we must still add a seriously firmer Rand outlook.

The Aussie Dollar is currently 1.153:$.

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By Cees Bruggemans

Interest rate decisions are not easy moments, as today showed once again, with the SARB keeping interest rates unchanged, prime being kept unchanged at 11%.

It may have looked effortless, keeping rates unchanged, yet so many private analysts expected a 0.5% rate cut. Then again, then there had been the SARB Governor’s warning in May that there wouldn’t be cuts at every MPC meeting (a reliable prediction in the long run) and that there was no more scope for ’significant’ cuts (sounding as if at least keeping a small backdoor half open).

But ultimately every interest rate decision remains a difficult one, given that so much is at issue, considering the level of indebtedness in the economy and the way economic agents respond to changes in rates.

There are many aspects taken into account when deciding where to pitch interest rates. Given today’s fashions in the

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Nigeria cut its benchmark interest rate to 8.0 percent from 9.75 percent. The Monetary Policy Committee reduced the reserve requirement to 1 percent from 2 and lowered the liquidity ratio for banks to 25 percent from 30. br /br /Liquidity is an issue for the banking sector right now with interbank lending rates at 18 percent.div class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/3742382075154765669-3889826152151868553?l=danfonds.blogspot.com'//div

Gold didn’t do much in the Far East or Europe on Wednesday…but the bottom, if you want to call it that, occurred shortly after the start of floor trading on the Comex yesterday morning in New York. From that low, gold rose steadily…gaining a little over $20 between then and the close of electronic trading at 5:15 yesterday afternoon. In the process, it set another new high for this move.

For the most part, silver’s action mirrored gold. The low of the day was at the London silver fix (noon London…7 a.m. New York). From there it rose, just like gold…closing at a new high for this leg up. And, for the second day in a row, I was underwhelmed by the performance of the HUI.

In the last three days, I’ve noticed that there has been a change in pattern during Far East trading. It’s not a lot, but it’s something

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GoldDrivers 2009 - Extraordinary Bullish Outlook For Gold Eric Hommelberg

Gold proves itself as only true alternative for the dollar Confidence in currencies shaken to the core Gulf countries are keen to break away from the link with the US dollar Chinese appetite for US debt in decline Former Bank of England official expects dollar collapse Investors fleeing into gold as US prints trillions HSBC, Citigroup, Merril Lynch, Goldman Sachs all turning bullish on gold Senior gold shares ready to move higher after impressive 100% bull run since October 2008 Junior gold shares waking up - bottomed out in December 2008

This piece is an update on “GoldDrivers

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A game of Monopoly, anyone?

Alex’s Notes: This is serious stuff.

Hyperinflation is no joke, and it looks like our brothers in England could be staring down both barrels of the hyperinflation shotgun.

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Reform plan raises fears of Bank secrecy

The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy.

By Edmund Conway, Economics Editor Last Updated: 7:01AM GMT 12 Jan 2009

The Government is set to throw out the 165-year old law that obliges the Bank to publish a weekly account of its balance sheet – a move that will allow it theoretically to embark covertly on so-called quantitative easing. The Banking Bill, which is currently passing through Parliament, abolishes a key section of the law laid down by Robert Peel’s Government in 1844 which originally granted the Bank the

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