The pressure on the South African Reserve Bank to lower interest rates drastically is uncalled for, Sanlam economist Jac Laubscher said on Friday.
Laubscher said he agreed with Reserve Bank Governor Tito Mboweni that further significant rate cuts were unlikely.
”Inflation simply remains too high,” Laubscher said.
However, he added he had a problem with the way in which the very important statement on rates was made.
”In my opinion any indication of the future policy stance should not be given by way of a cursory remark during the question-and-answer session following the Monetary Policy Committee meeting.
”It should be part of the official written statement so that it can be duly debated by the committee and the wording carefully considered in order to send out a clear, unambiguous message,” Laubscher said.
He added it was not clear whether Mboweni meant the repo rate would not be reduced further — or if he meant further rate cuts would be limited in total — or if he meant any further reductions would be smaller, depending on new data.
”In contrast to many of those who attended the news conference, I suspect he meant the latter,” Laubscher said.
He added that South Africa had also had the first indications of the challenges government finance would be facing this year.
Figures for April released by the National Treasury showed government revenue from VAT was R2,2-billion less than in April last year.
Total revenue from tax was R1,7-billion less.
”Although the fact the Easter weekend was in April this year, whereas it was in March last year, could have played a role in the decline along with the general election, it is an early indication of the pressure that will be put on government revenue this year,” Laubscher said. — Sapa