South African Reserve Bank’s parliamentary remarks

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By Cees Bruggemans, Chief Economist of FNB.

Local news media ran away today with coverage about SARB and Treasury comments regarding foreign reserves and assistance to Europe, if any.

More interesting did I find the following comment from an overseas bank (BNP Paribas) this morning regarding parliamentary remarks yesterday by SARB Governor Marcus:

“SARB Governor Marcus delivered some very dovish comments once again, pointing out household consumption was slowing and that the lack of demand was “a huge concern”.

Importantly, Marcus stated that the SARB wasn’t necessarily “wedded” to the results of their inflation forecasting model, despite price growth being seen as exceeding the target band by the end of the year. This implies that a larger emphasis could be placed on growth as opposed to inflation which could push the SARB to deliver a cut in rates at its November meeting.”

So are interest rate cuts coming? Only 28 sleepies to go to the next MPC meeting on 10 November (a week after Europe delivers of important stuff) where presumably more will be revealed.

Source: Cees Bruggemans, FNB, October 13, 2011.

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