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May 27 2012 11:21
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Johannesburg - The consensus forecast among the 14
economists surveyed by I-Net Bridge is for a pause in South Africa's tightening cycle at 11% come Thursday next week.
The central bank begins its two days of deliberations on Wednesday, with the final decision due just after 15:00 on Thursday.
However, of the 14 local economists surveyed, two expected an increase of 50 basis points. Global analysts Lehman Brothers also said on Friday that they expected a 50 basis point increase.
However, the majority of respondents felt that when consumer, manufacturing and vehicle sales declines plus the impact on growth were lumped together, it showed a clear impact by the 400 basis points of accumulated increases since June 2006.
Other commentators say the National Credit Act will also start providing a natural underpin going forward.
One of the economists in the survey, Mike Schussler from T-Sec, added that while he had thought they would hike, he had now changed his mind.
"If you look at the US decrease and the Canadian decrease and add the impact of the electricity crisis on the economy, then I think rates are high enough already," he explained.
"However, they might pause for a while," concluded Schussler.
The repo rose as high as 13.5% in September 2002, before receding to 7% in April 2005, with the current tightening cycle then beginning in June 2006.
A pause on Thursday will keep the prime overdraft rate - the key one for homeowners with a mortgage - at 14.5%.