Wednesday, November 14, 2007

Mboweni favours a rate hike

Mboweni favours a rate hike
By Michael Hamlyn, I-Net Bridge
Published:Nov 14, 2007
Reserve Bank governor, Tito Mboweni.
Reserve Bank governor, Tito Mboweni, gave a very strong signal that another interest hike is on the way when he told members of parliament that in his view rates should go up.
Speaking to the finance portfolio committee, Mboweni said: "If I was the only member of the Monetary Policy Committee, I would definitely increase rates in December."
The bank staff’s forecast for inflation in the coming months shows inflation increasing above the 6% target for part of 2008 before dropping back into the target range before the end of the year.
He told the committee: "The inflation picture for South Africa is that pressures are on the upside, whether from electricity or vegetables. When the forecasts indicate that inflation is likely to stay above the target, the task of the central bank is to tighten monetary policy."
He said that there was a period recently when the Monetary Policy Committee should have tightened rates, but did not do so. "It was an error," he said.
But he also reminded members that he was not the only member of the committee, and it was not certain that they would take his advice.
He joked with the members that Trevor Manuel, the finance minister, would complain that he would ruin people’s Christmas, but he said it was not up to him. He did not fix the target range, he said.

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