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Economists pessimistic on rate cut

By Jane Steinacker | Oct 20, 2009 | COMMENTS [ 0 ]

DON'T expect a rate cut. This is the message from two-thirds of the economists surveyed by Sowetan yesterday.

This is in anticipation as to whether the South African Reserve Bank's (SARB) monetary policy committee (MPC) will decrease interest rates on Thursday. The two-day meeting starts tomorrow.

The MPC sat on its hands in an announcement on September 29 that left the repurchase rate unchanged at 7percent.

"We're on hold for now," said Brait economist Collen Garrow.

According to Econometrix's Tony Twine, this week's meeting could confirm "that we are at the end of the road" as far as decreasing interest rates is concerned.

But opinion is divided as to what Tito Mboweni will do when he delivers his last MPC decision as governor of the Bank before making way for Gill Marcus next month.

The weak retail trade figures released last week, which showed a decrease of 6percent in the three months to August, may persuade the MPC to entertain a rate cut, said Liberty Life consumer economist Tendani Mantshimuli.

But Stanlib economist Kevin Lings believes that the MPC will "keep it (the rate) on hold well into next year".


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