Markets await rates decision

Johannesburg - Thursday September 9 will be the day to watchfor markets as the South African Reserve Bank's (Sarb) Monetary Policy Committee (MPC) will announce whether or not it has decided to reduce the repo rate to 6.0% from 6.5%.
   
If a rate cut happens, the prime lending rate – the rate at which consumers borrow from commercial banks - would also fall to 9.5%.
   
The MPC starts its meeting on Wednesday September 8. Bank Governor Gill Marcus would not give anything away at a recent business seminar in Soweto, saying: "Markets will just have to wait".
   
Brait economist Colen Garrow said that comments by monetary policymakers have done little to alter the market consensus of a 50 basis point interest rate cut.
   
"But at the same time, moral suasion has prompted more caution in the market that the rate cutting cycle may be more aggressive than this," he added.    
   
Standard Bank economists Johan Botha and Shireen Darmalingam said that there was growing concern that the after effects of the recent recession are still impinging on the economy. They expect the bank to reduce the repo rate by 50 basis points.
   
lt's a very important next week is manufacturing production data for July, due on Wednesday from Statistics South Africa (Stats SA).

The data will give an indication of how the country's second biggest sector is performing after increasing 8.8% year-on-year (y/y) in June.
   
Economic analyst at Econometrix Zandile Makhoba said the improvement in the business activity component of the Purchasing Managers' Index (PMI), a leading indicator of activity in the sector, suggested there could have been a further improvement in production levels in July.
   
Botha and Darmalingam however expect manufacturing production to have eased in July.
   
"We expect manufacturing production to have eased to 6% y/y in July," they said.
   
Stats SA will publish the July mining production data on Thursday.
  
Gold and foreign exchange reserves can be expected from the Sarb on Tuesday.