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Johannesburg - Asset managers Stanlib said on Tuesday that while there are pressures in the economic pipeline that argue for a hike in interest rates, their current view is that rates will remain on hold come Thursday next week.
"The better than expected PPI (producer inflation) combined with a small trade deficit in June, confirming the slowdown in consumer activity; as well as a further decline of the Investec PMI (Purchasing Managers' Index) reflecting that our manufacturing activity is under significant pressure," they
said.
However, there still are pressures in the pipeline which would argue for another 50 basis point hike.
"These were strengthened by June CPI and CPIX (consumer inflation) coming out higher than expected, although hopefully we are nearing the peak of the inflation cycle; as well as credit growth and money supply, which remained stubbornly high in June, therefore not showing a convincing slowdown that the
Reserve Bank would need to keep rates on hold," conclude the asset managers in a research note.
- I-Net Bridge