Another interest rate hike may not be on the cards.

Posted On Thursday, 25 April 2002 10:01 Published by
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The perception that an interest rate hike will follow each and every inflation hike is misleading

The inflationary consequences of the rand`s dramatic decline last year, particularly during the last quarter, has led to a two percentage point increase in the interest rate but FNB chief economist Cees Bruggemans says the perception that an interest rate hike will follow each and every inflation hike is misleading.

Bruggemans told Moneyweb`s Classic Business that when interest rates were increased in March for a second time, Tito Mboweni, governor of the SA Reserve Bank, was acting in an anticipatory manner compared to commentators generally being reactive.

He believes that inflation will peak at around 10% and 9% in the third and fourth quarters, and then start falling - by the end of next year we will be sitting around 6%.

Bruggemans believes that it is too early to argue about whether the Bank will achieve its inflation targets next year.


Publisher: Moneyweb Classic Business

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