How the recent inflationary economic events have put cash back on the throne.
Loading player...
Global inflation is rising, central banks around the world are tightening policy rates, the US Federal Reserve is hiking rates in aggressive increments, and we are still faced with two expected rate hikes of 75 basis points before the year is up.
According to Zisanda Gila, Portfolio manager at Momentum Investments, the story is no different in South Africa’s local markets. “Growth remains under pressure and has been revised down by the South African Reserve Bank. The rand has also depreciated strongly since the start of policy normalisation in the major economies in addition to the slowdown in the Chinese economy.”
She says the situation is now ‘stickier’ than initially anticipated with the South African Reserve Bank (SARB) being concerned with inflation. For her, cash or money markets become a useful asset class to be invested in during stressful economic times and can be a fairly decent hedge against inflation over a short investment horizon.
According to Zisanda Gila, Portfolio manager at Momentum Investments, the story is no different in South Africa’s local markets. “Growth remains under pressure and has been revised down by the South African Reserve Bank. The rand has also depreciated strongly since the start of policy normalisation in the major economies in addition to the slowdown in the Chinese economy.”
She says the situation is now ‘stickier’ than initially anticipated with the South African Reserve Bank (SARB) being concerned with inflation. For her, cash or money markets become a useful asset class to be invested in during stressful economic times and can be a fairly decent hedge against inflation over a short investment horizon.
