Inflation targeting is likely to be reviewed, because if South Africa’s policymakers only use interest rates as the tool to fight inflation, the country is in for a nasty generational learning experience as the policy will not be removing the cause of inflation, said Chris Hart, chief economist from Investment Solutions.
South African stocks were mixed in early afternoon trade on Wednesday due to volatility, but the feature of the morning session was a strong gain by synthetic fuel producer Sasol. At 12.25pm, the JSE’s broader all-share index was up 0,09%, with the industrial index up 0,88%, but resources were down 0,38%.
One of the most decisive rates meetings yet of the South African Reserve Bank’s monetary policy committee (MPC) began on Wednesday morning with "no hitches", according to a bank spokesperson. The meeting will end after lunchtime on Thursday, with the final decision announced live to the public just after 3pm.
While emerging markets have been resilient so far to global market subprime turmoil, global spillovers could test their resilience, said the International Monetary Fund’s (IMF) director of monetary and capital markets, Jaime Caruana, on Tuesday at the launch of the IMF’s latest <i>Global Financial Stability Report</i>.
A senior bond-portfolio manager and an emerging-markets analyst from Lehman Brothers both uttered the same dreaded word soon after reading what Tito Mboweni had said in Parliament on Wednesday: hawkish. In fact, Lehman Brothers now predicts a 50-basis-point increase in the repo rate on April 10 to 11,5%.
The South African Reserve Bank quarterly bulletin data on Wednesday showed that household debt was at a new record 77,6% from 77,5% in the third quarter, but gross domestic expenditure dipped to just 0,2% in the fourth quarter from a revised 5,4% (5,75%) previously.
The rand and bond market in South Africa are at one that the indefinite delay in South Africa’s producer price index (PPI) is causing the country’s reputation harm on the global stage. Dealers and portfolio managers in the rand and bond markets on Monday said that the untimely delays were causing damage.
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/ 20 February 2008
Finance Minister Trevor Manuel played his cards close to his chest on Wednesday when questioned about his future during a media conference before his delivery of the national budget in Parliament. "I have said in the past that I serve. I can’t say what will happen," he said.
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/ 20 February 2008
Finance Minister Trevor Manuel has delivered what he terms a "can do" budget that aims to put the doomsayers and naysayers at rest by boosting infrastructure and people. Manuel noted that this was important or else the doomsayers and naysayers would simply "take control".
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/ 19 February 2008
Brait economist Colen Garrow says that while the government’s inflation-targeting and exchange-control policies are overdue to be fine-tuned, it is unlikely that any tangible announcement will be made on Wednesday in Finance Minister Trevor Manuel’s budget speech.
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/ 13 February 2008
The MD of Standard and Poor’s (S&P) South Africa, Konrad Reuss, said on Wednesday that some of the recent pessimism in South Africa is completely overdone and that he does not feel the country is going to dip into a recession. South Africa currently has a "stable" foreign-currency rating by S&P.
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/ 12 February 2008
Billy Joubert, director of tax at Deloitte, said on Tuesday during a pre-budget seminar that no rate changes to personal income-tax rates are expected, while at best the corporate tax rate may be cut to 28% from the current 29%. Joubert noted that South Africa’s corporate tax rates compare favourably with other countries.
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/ 12 February 2008
Chief economist at First National Bank Cees Bruggemans said on Tuesday that the apparent large-scale escalation in emigration intentions among talented professionals and managers is a major threat to the economy, especially when combined with the impact of the electricity crisis.
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/ 28 January 2008
There is a mismatch in South Africa’s economy between the structural direction in which it is headed and its current skills profile, says Dr Azar Jammine, director and chief economist of Econometrix. While the economy is creating 194 000 jobs, according to formal-sector statistics, 368 000 students passed matric last year.
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/ 28 January 2008
Director and chief economist of Econometrix Dr Azar Jammine said on Monday that he was becoming a little nervous about the implications of the political environment — particularly views that economic policy will not be changed — on the ability of South Africa to keep attracting capital flows.
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/ 21 January 2008
It is almost inconceivable that the South African Reserve Bank’s (SARB’s) Monetary Policy Committee would raise interest rates in the current atmosphere, according to strategist for Investec Securities, Brian Kantor. "I would not have raised the last two times. It is quite clear now that the last increase was over the top," he said,
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/ 18 January 2008
Chief economist of Citigroup in South Africa Jean Mercier says foreigners see more political risk in South Africa now than they have over the past few years, and will be keenly monitoring any "new faces", especially in the key finance and Reserve Bank positions, as these people may be untested at high-level economic decision-making.
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/ 18 January 2008
Chief economist of Citigroup in South Africa Jean Mercier says he expects a South African growth rate of 4% in 2008, but adds that it should start stabilising towards the second half of the year and then have a bit of a pick-up in 2009. He foresees growth of 4,5% in 2009, with it picking up towards the soccer World Cup in 2010.
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/ 17 January 2008
If the South African Reserve Bank needs further evidence of the dampening effect of higher rates on real economic activity, recent building data has been just that, according to independent economic analysts. A major challenge facing the government is also the extreme escalation in building costs.
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/ 16 January 2008
Despite a significant dip in real retail sales in South Africa, analysts feel that risks remain for another rate hike on January 31. However, the central bank may also have to ponder that real retail sales could head into negative territory in the months ahead and lead consumers into a recession.
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/ 15 January 2008
<a href="http://www.mg.co.za/specialreport.aspx?area=zuma_report"><img src="http://www.mg.co.za/ContentImages/243078/zuma.jpg" align=left border=0></a>Global analysts Lehman Brothers said in a research note on Tuesday that African National Congress president Jacob Zuma’s high-growth policy plans sounded "rather expensive", with funding probably coming from the budget surplus.
November’s government revenue and expenditure figures suggest that the National Treasury is still on track to meet the budgeted surplus for the current fiscal year, with only the last quarter remaining, according to independent analysts. The Treasury recorded a fiscal deficit for November of R4,6-billion.
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/ 7 December 2007
South African taxpayers should brace themselves for scant relief when the Budget is announced in February next year as analysts feel Finance Minister Trevor Manuel is likely to be very cautious due to the cyclical risks underpinning the economy. Analysts also feel that the Budget needs to be better harnessed to improve effective expenditure.
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/ 6 December 2007
South African markets were expecting slightly more hawkish rhetoric by the South African Reserve Bank than transpired on Thursday and now feel inflation is fairly close to its peak. The bond market, especially at the previously sold-off short end, has reacted favourably.
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/ 30 November 2007
South African Reserve Bank Governor Tito Mboweni said on Thursday evening that inflation-targeting would be here "for many years" and economic policy is not going to change in South Africa as the foundations built up by President Thabo Mbeki, himself and Finance Minister Trevor Manuel were too strong to be weakened.
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/ 13 November 2007
If the South African Reserve Bank is consistent, then inflation matters have deteriorated since October and another rate hike can be expected in December, according to Dr Azar Jammine, director and chief economist of Econometrix. However, Jammine on Monday also criticised some of the thinking in this regard.
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/ 12 November 2007
There is potential for the rand to tend to be weaker due to the current-account deficit, but more than anything the currency’s fortunes will depend on the strength of the global economy, according to Dr Azar Jammine, director and chief economist of Econometrix.
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/ 9 November 2007
High interest rates in South Africa may continue supporting the rand in the coming months as investors continue to be attracted by the growing yield differential between United States treasuries and their rand-denominated equivalents, says global analyst firm Moody’s Economy.com.
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/ 6 November 2007
The South African Reserve Bank said on Tuesday in its latest <i>Monetary Policy Review</i> that the breach of the 3%-to-6% inflation target is of "significant concern" to the monetary policy committee. The bank added that some of the key inflation risks have proved "persistent" since the previous review was published in May.
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/ 6 November 2007
The South African Reserve Bank (SARB) said on Tuesday in its latest <i>Monetary Policy Review</i> that in light of the risks around the subprime crisis in global markets, it is important to maintain a stable and transparent monetary policy regime. Authorities in some emerging markets have been advised to strengthen surveillance.
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/ 2 November 2007
Finance Minister Trevor Manuel said on Friday at a <i>Financial Mail</i> medium-term budget briefing that the world had changed in the past 12 years and developing countries needed to become more involved in the world trade regime or else they would just be following the procession.
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.