By Vernon Wessels

Johannesburg - It is crunch time for Statistics SA today as the national statistics agency prepares to publish the findings of a review into how it bungled the consumer inflation figures.

The market has been waiting for 10 days to confirm how material the miscalculations were and how Stats SA intends to rectify the errors.

The Reserve Bank's reaction to the review will also be watched closely.

Central banks like to keep the market guessing, and, although unlikely, it is not impossible that Reserve Bank governor Tito Mboweni announces a 1 percentage point cut ahead of the June 11 and 12 monetary policy committee meeting.

"It would not be a bad idea to cut before June. It will give the country a huge monetary injection and catch the market off guard from a timing perspective. Just about everyone has taken as a given that the Reserve Bank will cut rates in a fortnight," said Michael Keenan, a market analyst with MMS International.

Offshore players have lost faith in the Reserve Bank as its monetary policy seems to be too tight and out of kilter with recent economic data that show inflation is diving. The country's high interest rates have been cited as a source of strength for the rand, which, although good for inflation, has choked growth  
.

"A rate cut before June would send a clear message to the market that the Reserve Bank is watching inflation closely and that it is responsive to the market's needs," Keenan said.

It appeared more likely the bank would lower rates only after its monetary policy committee meeting by 1 percentage point, even though the bond market had priced in a more aggressive cut, he added.

On top of the watershed review of the targeted measure of inflation, CPIX, which is headline inflation less mortgage rates, the market will be analysing money supply and trade data.

Investec Asset Management portfolio manager John Stopford, who first spotted the consumer inflation error, said the costs to South Africa of bad data and their consequences needed to be addressed as clearly and decisively as possible.

In addition to errors highlighted by Investec on rental inflation, Stats SA will look at domestic workers' cost data, which the inflation rate seems to have understated for some time.

It appeared the information used by the Reserve Bank to raise interest rates last year was not substantially affected by problems in the calculation of CPIX, Stopford said. He estimated that rental data used could have overstated CPIX by 1.7 percent.