FRIDAY, 10.30AM:
LATEST credit extension and money supply growth figures released by the Reserve Bank on Thursday have scotched hopes of an early interest rate cut and once again raised questions about the reliability of these indicators as a basis for monetary policy.
Private sector credit extension growth in October increased 14,41% against the same month last year, against expectations of around 13,5%. The total credit extended in October amounted to R6,6-billion, which led to a substantial increase in the money supply. According to the Bank, the M3 increased 17,09% compared to September’s 16,30%.
The increases fly in the face of third quarter economic growth figures published earlier this week by the Central Statistical Service, which show that economic growth almost ground to a halt in the third quarter.
The release of the latest figures wiped out early gains on the local bond market, with further lossesd expected on Friday.
The bulk of the increase in private credit extension was ascribed to mortgage loans, suggesting that embattled consumers are borrowing against their homes in an effort to stay afloat.