The SA Chamber of Business (Sacob) called on the Reserve Bank to cut interest rates "sooner rather than later" at yesterday's release of its business confidence index for April.

Sacob chief executive James Lennox would like to see governor Tito Mboweni cut rates at the bank's monetary policy committee meeting next month. Mboweni did not have to wait that long, he said.

"We suggest the Reserve Bank is being too cautious, and a reduction in interest rates is becoming overdue," Lennox said. Business confidence inched up by 1 index point to 106.8 in April from 105.8 in March.

Sacob said the most important issue for international business during April was the speedy conclusion of the war in Iraq, which brought some stability back to the oil price. Sacob economist Richard Downing was surprised that the index was up.

"Consumers are smiling, businesses are expecting their input costs to come down and there is the prospect of an interest rate cut," Downing explained.

If the rand maintained its strength there would be a severe drop in consumer inflation by year-end, he said. The rand's strength, Sacob said, had hit exporters hardest, while manufacturing, mining and other commodity sectors were revising their investment spending and there were predictions of job losses .

"Given the effect the rand has on the real economy with job losses coming up and the conditions in the economy, action should be taken sooner rather than later," Lennox said. Downing said manufacturers were finding it very difficult to make investment decisions.

Output prospects were below 50 index points in Sacob's manufacturing survey. Lennox had heard about eight small businesses that were shutting down in KwaZulu-Natal.

"We have received a number of calls and e-mails from our members in the past 10 days," Lennox said, hinting that the business confidence index could look quite different next month.

Sacob said a cut in interest rates would flush some of the speculative money out of the local financial markets and "bring about a more realistic picture of the true value of the rand".

It forecast that economic growth would be more realistic at between 2.6 percent and 2.8 percent, compared with the 3.3 percent forecast of the treasury.