Wednesday, August 13, 2008

Reserve Bank faces tough decision

By Mishkah Anthony
13 August 2008

Economists say the Reserve Banks Monetary Committee has a tough two days of decision making ahead as it decides on interest rates.

Over the past months inflation figures have shown a marked increase, determined by food and fuel prices. But in the last few weeks, there has been some evidence that inflation cycle has peaked.

Economist Hugo Pienaar says, in the next couple of month’s inflation could still accelerate, probably be peaking around 12% to 13 % .

“I think the most important thing is what the prospects are beyond 2008 looking into 2009”

Pienaar says they do expect to see quite a deceleration that combined with the weakness in the economy.

“We don’t expect the reserve bank to increase the interest rate this week.”

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