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12 Aug 2009 09:54
The South African Reserve Bank (SARB) began its two-day meeting on interest rates on Wednesday morning, a spokesperson for the bank confirmed.
While most economists expected the monetary policy committee (MPC) of the SARB to keep the repo rate on hold at 7,5%, trade unions are hoping for a rate cut.
The SARB will probably focus on risks to the inflation outlook as it battles to bring inflation back into the 3% to 6% target range.
However, the Congress of South African Trade Unions is hoping for a 200 basis point cut in rates.
Earlier this month, its spokesperson, Patrick Craven, said: “The deepening recession, combined with falling inflation, make the obsession with inflation-targeting even more irrelevant.”
Craven added that the SARB’s Tito Mboweni, “in his final announcement” as governor, could do the nation “a huge favour” by announcing a 200 basis point drop in the repo rate.
Craven said this would do much to relieve the burden on consumers and to give the ailing car and other manufacturing industries the shot in the arm they desperately needed to reverse the decline in sales and save jobs.
The SARB’s MPC will announce its rates decision on Thursday afternoon.—Sapa
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