Reserve Bank Govener Tito Mboweni will be remebered by his suprize rate cut of 50 basis points today in attempt to please the union pressure of demanding a 200 basis point cut.
This surprised most economists' expectations of rates remaining unchanged. The repo rate is now at 7%.
Tito Mboweni made the following comments about the state of the SA economy:
The economy has likely contracted during the second quarter.
Inflation is to enter target range during Q2 2010
Inflation to remain in target range in 2011
Outlook for international economy improved
Domestic economic conditions "subdued"
The GDP contraction in Q2 was less than Q1 but still negative
Risks to inflation outlook from cost-push-pressure, such as Eskom
Adverse pressure for administered prices
Electricity prices, wage hikes exceed inflation
