From the Mail & Guardian, Reuters,02 April 2008.
Johannesburg, South Africa
The central bank said on Wednesday private sector credit extension
slowed from a revised 23,06% year-on-year in January, while the M3
money supply growth also fell, to 21,07% from 25,24% year-on-year in
Credit demand was lower than market expectations of 21,48% and M3 money
supply was also slower than the consensus of 22,28 in a Reuters poll.
The Reserve Bank left its key repo rate flat at 11% in January, after
raising it by 400 basis points between June 2006 and December last year.
But inflation continues to accelerate and central bank Governor Tito
Mboweni was hawkish when he spoke in Parliament last week, saying the
economy was not in danger of being strangled by higher interest rates.
Some analysts said the data showed tighter monetary policy was having
the desired effect on indebtedness, and the central bank should not hike
"The slowdown is good, it is adding weight to calls for the Reserve Bank
not to hike rates next week," said Colen Garrow, economist at Brait
"Additional momentum behind the view is that the consumption side of the
economy is slowing fast. To hike rates would be a bit too much," he said.
But the data may not be enough to deter the central bank after CPIX
inflation reached a five-year high of 9,4% in February, much higher than
the 3% to 6% target band.
"I still think given the very high inflation figures, this cooling is not
enough to provide a counter," said Fanie Joubert, economist at Efficient
The central bank's Monetary Policy Committee meets on April 9 and 10.
The rand was almost unchanged after the data at 7,97 to the dollar at
6.30am GMT, from 7,9725 before the data. The yield on the 2015 bonds was
lower at 9,125% from 9,155 before the data.