The South African Reserve Bank is expected to forge ahead with its monetary tightening at Thursday’s policy meeting, say global analysts Moody’s Economy.com.
The analysts highlight that August credit and sales figures have helped to underpin opinion that the Reserve Bank will raise interest rates by another 50 basis points.
“Data out this week showed demand for credit remains robust, advancing 22,9% year on year (y/y) during August — only a touch slower than the 23,1% growth rate recorded a month earlier,” explains lead South Africa researcher Dr Ruth Stroppiana.
She adds that retail sales growth also surprised on the upside, increasing 15,7% y/y during August, from 15,8% in July.
“There is, however, some evidence to suggest that higher borrowing costs are starting to be felt. Vehicle sales dropped an annual 3% in August, marking the fifth consecutive month of decline; also, growth in leasing finance slowed to 12% y/y in August, from 16% in July,” she points out.
However, Stroppiana concludes this will likely not be enough to hold Reserve Bank back from tightening again. — I-Net Bridge