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Out of our control?

20 April 2006 Angelo Coppola

Cees Bruggemans chief economist at FNB - says that that while the SARB governor Tito Mboweni was hawkish in terms of the current state of the economy, the next couple of Monetary Policy Committee meetings will be interesting to observe, especially with t

The question is whether the SARB will step in or not. When you are unsure you will do nothing You can talk an excellent game but nothing is done, as the governor has done.

The currency is starting to come into focus again. The international factors are preparing us for new strength (commodity prices), and he maintains that there will be a weaker dollar at some point and the CPIX inflation levels may stay in the band, but the oil price will push it out of the band.

On the international level the Brent oil price is at record levels, and this is concerning government. The trend will not be broken and will go higher and will start affecting the local inflation levels. Gold is another issue, in terms of commodity prices, and there is talk of R850 levels. This trend will neutralize the current account levels.

Turning back to the local level, white and black consumers have the same levels of confidence, and could still go to higher levels.

Domestic household spending is still climbing, while government is showing less consistency, there are ambitious spending plans to correct this. There is a general slow down but this will be a breathing space and the improvement will come.

Looking forward, spending growth from government is a good sign for property developments. It also appears that there is a steep take off in terms of income against indebtedness.

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