'SARB likely to maintain hawkish tone'
August 4, 2006
Moody's Economy.com said that while it expected the South African Reserve Bank to maintain its hawkish tone in the coming months, leaving the door open for another rate hike later in the year, it did not expect the bank to embark upon an aggressive tightening campaign.
"Even though pipeline inflationary pressures have picked up in recent months, we are not anticipating an inflation outbreak in South Africa and our current forecast is for overall consumer price inflation to come in around 3.8 percent in 2006, as higher borrowing costs take some of the steam out of consumer spending," it said.
Nevertheless, with household debt levels at a record high it said it was not ruling out further monetary tightening action from the central bank this year.
"Regarding South Africa's financial markets, we foresee more of the same tumultuous trading action, with volatility continuing to ride high in the near term until a more clear picture on both domestic and global inflation conditions and interest rate cycles can be determined," it added. - I-Net Bridge