UPDATE 1-S.Africa cbank cuts rates 50 bps, sees GDP moderating

* SARB’s GDP forecast down

* Household demand seen constrained

* Above-CPI wage settlement an upside risk

PRETORIA, Sept 9 (BestGrowthStock) – The South African Reserve Bank
cut its repo rate further on Thursday, citing a softer economic
growth outlook and worries about above-inflation wage rises.

The Monetary Policy Committee cut the repo rate by 50 basis
points to 6.0 percent in line with expectations in a Reuters
poll, in which 19 out of 23 analysts called the rate move.

The move brings interest rate reductions since December 2008
to 600 basis points and takes lending rates to a new
three-decade low.

“The Bank’s forecast of GDP growth has declined moderately
since the previous meeting of the MPC, with growth now expected
to average 2.8 per cent in 2010 and 3.2 per cent in 2011,” the
bank said in its statement.

The Bank’s previous forecast was at 2.9 percent.

Household spending, a key driver of economic previously, was
expected to be constrained by high levels of indebtedness and
unemployment.

The Reserve Bank said inflation was largely contained and
was seen reaching an average 3.7 percent in the third quarter of
2010 and measure 5.1 percent by the final quarter of 2012, well
within the Bank’s target of between 3 and 6 percent.

The rand’s appreciation has helped on the inflation front.

“The resultant search for yield by foreign fund managers has
had implications for the rand exchange rate, which remains the
main downside risk to the inflation outlook,” the SARB said.

The rand firmed to 7.1649 against the dollar after the
bank’s decision and yield fell further, with the 2015 yield down
9.5 basis points to 7.11 percent.
(Reporting by Stella Mapenzauswa; Writing by Phumza Macanda;
Editing by Ron Askew)

UPDATE 1-S.Africa cbank cuts rates 50 bps, sees GDP moderating