Johannesburg - When Reserve Bank governor Gill Marcus reads the Monetary Policy Committee (MPC) statement on its interest rate decision to the media for the first time on Tuesday, she will probably attract more attention than the decision.
Though most economists expect interest rates to remain unchanged, Tuesday's announcement could indicate whether the Reserve Bank may perhaps head into a slightly different direction under Marcus.
"There will be particular focus on how she communicates with the media after the official announcement," NKC economist Christie Viljoen said. "Mboweni usually only read the statement, then made a few jokes and perhaps bullied a journalist."
Viljoen does not expect a sudden policy change at the Reserve Bank.
"Since the announcement of her appointment, Marcus has given no indication that things would change," he said.
"She and the minister of finance will of course talk about inflation targets, but that doesn't mean the target will be thrown out. We have had the same processes, targets and people for about 10 years now. This must be revised, but that doesn't necessarily mean it will change."
Finance Minister Pravin Gordhan said in a written reply to parliament on Friday that inflation targets would remain the framework for monetary policy, since they offer a clear nominal anchor for the policy.
Rand Merchant Bank economist Carmen Nel said also she was expecting the repo rate to remain unchanged at 7%. She said on the basis of Marcus' previous role as deputy governor at the bank and her career in the private sector (among other things as chair of Absa) the market saw her as independent, transparent and a good communicator. However, this could be tested on Tuesday.
"If the MPC lowers the repo rate, Marcus could be seen as too conciliatory or as being too close to the leftwing and therefore as complying with [trade federation] Cosatu's other demands, even if the MPC thinks that lowering interest is the right thing to do," she said.
Efficient economist Freddie Mitchell said that the governor of the bank does not decide on the interest rate alone. The decision is made by the whole MPC.
"Despite possible political pressure on Marcus, I can't see monetary policy changing," he said.
According to André Mellet, an economics lecturer at North West University's Vaal Triangle campus, there is no room for further interest rate cuts.
"Our real interest rate is very close to 0%," Mellet said.
"If the repo rate falls below 7%, the real interest rate will become negative. That would discourage pensioners and others from saving, and if people don't save there's no money for investments."
Mellet said Marcus has a mandate - the bank's inflation target band of 3% to 6%.
"If she lowers interest further now, this - together with the 2010 Fifa World Cup tournament - would lead to demand-pull inflation, and then interest rates would have to be raised again."
Statistics SA will publish the retail sales figures for September on Wednesday. Retail sales fell by an annualised 7% in August. Nel expects the September fall to be only 4.1% on an annualised basis, thanks to lower food and fuel prices and also easier access to credit.
- Sake24.com
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