Marcus kicks off first MPC meeting

Monday, November 16, 2009

Pretoria - Reserve Bank Governor, Gill Marcus, will over the next two days chair her first Monetary Policy Committee meeting in Pretoria since taking office.

Marcus replaced former Governor Tito Mboweni earlier this month.

The MPC will analyse current financial data and decide whether or no to change the repo rate.

Nedbank senior economist Isaac Matshego said that the two-day meeting would have to deliberate over weak retail numbers, even though manufacturing over the short term showed improvement.

He added that there had been relatively no change in the Rand.

"The global economy looks weak although there are pockets of improvements. The overall picture has not changed much so therefore another repo rate cut would not unreasonable," Matshego told BuaNews.

Nedbank is therefore predicting a 50 basis point cut in the repo rate.

"However, the biggest risk is that the December shopping period could be weaker," said Matshego, citing job losses and contracting salaries as well as a weak consumer confidence.

Standard Bank senior economist Johan Botha said that a cut in the repo rate was unlikely.

"We're not likely to see a cut, the economy is performing poorly," he told BuaNews.

"Not much has changed since the last meeting, however, retail sales coming out this week will provide further weak numbers. The economy is still battling to bottom out," he explained.

Botha added that households were still battling with debt and that consumers were constrained.

Commenting on the Governor Botha said: "I don't think there will be huge changes, she understands the mechanics. I don't foresee any huge changes in the short term; I think she would like sometime to think and to talk to people."

At the last meeting the bank kept the repo rate at 7 percent.

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