The South Africa Reserve Bank is expected to continue its aggressive monetary easing, which should help bolster domestic demand, said Moody’s Economy.com on Friday.
The economists are concerned that slumping domestic demand bodes ill for growth.
They note that the bank’s biannual monetary policy review, published on Thursday, provides room for further interest rate cuts in the coming months.
“Central bankers are forecasting consumer price growth to ease to 6,2% in the third quarter. Price growth will accelerate briefly at the end of the year before resuming its easing trend, falling to 5,4% by the end of 2010.
The bank notes, however, that global uncertainties mean such forecasts are subject to higher risk than usual,” they say.
The Moody’s Economy.com economists also note in their report that economic and fiscal policy is not expected to change significantly under new Finance Minister Pravin Gordhan. — I-Net Bridge