OWN CORRESPONDENT, Johannesburg | Monday 9.00pm.
SANLAM’S chief economist Jac Laubscher said on Monday he concurs with Reserve Bank governor Chris Stals’s assessment that the rand appears to be levelling off, and he would not be surprised to see it dip below the R6 to the dollar mark.
Speaking before the National Council of Provinces’ finance committee, Laubscher said high interest rates will mean lower spending, which will in turn have a positive effect on the current account of the balance of payments.
Government’s tight monetary policy should relax by the second half of 1999 and interest rates should drop two to four percentage points during the year, he anticipates.
Headline inflation should hit nine percent by the end of this year as a result of the increase in the banks’ mortgage rate, Laubscher said, but will drop quite rapidly to 5% toward the end of 1999. Commenting on the effect of the 1999 general elections on the economy, Laubscher said, he not concerned, as there will be a continuity in economic policy, which is the important thing as far as markets are concerned.
He conceded, however, that there are foreign investors who will not see it the same way, leading to ”some restraint” in foreign capital inflow ahead of the polls.