South African Central Bank May Leave Rate Unchanged: Week Ahead

By Mike Cohen

Oct. 6 (Bloomberg) -- South Africa's central bank may keep the benchmark interest rate unchanged this week as inflation concerns offset the need to counter a worsening economic outlook sparked by the global credit crisis and slowing consumer spending.

The Reserve Bank will hold its repurchase rate at 12 percent, according to all 12 economists surveyed by Bloomberg. The bank's monetary policy committee will announce its decision at about 3 p.m. on Oct. 9 in Pretoria.

The bank has raised the key rate by 5 percentage points since June 2006 as inflation, which reached a record 13.6 percent in August, exceeded the 3 percent to 6 percent target range. The subsequent slowdown in household spending is being compounded by the global credit crunch, which is damping demand for exports.

``Consumer spending is slowing,'' said Jac Laubscher, an economist at Sanlam Ltd. in Cape Town. ``With global financial markets under pressure and with the full effect of the global slowdown yet evident, I think it would be unwise to apply additional pressure to the economy.''

Higher rates contributed to vehicle sales falling 18 percent last month, an industry body said on Oct. 2.

The central bank will release gold and foreign currency reserve data on Oct. 7. The bank will probably say gross reserves rose to $34.6 billion at the end of September from $34.3 billion a month before, according to the median estimate of six economists surveyed by Bloomberg.

On Oct. 8, the government statistics agency will release August manufacturing data. Growth in factory output probably eased to 1.4 percent from 3.3 percent in July, analysts estimated.

Corporate News

Allied Electronics Corp. Ltd., South Africa's largest publicly traded maker of telecommunications and power equipment, and PSG Group Ltd., a South African brokerage firm are to release first-half earnings on Oct. 7.

Last week, South Africa's rand fell 1.1 percent against the dollar to close at 8.4435.

Bonds fell last week, with the yield on the benchmark government bond, due September 2015, rising 10 basis points, or 1 percentage point, to 8.9 percent. Yields move inversely to bond prices.

The benchmark FTSE/JSE Africa All Share Index plunged 7.4 percent during the week, to close at 22,678.25. Among major companies the biggest losers were Sasol Ltd., the world's biggest producer of motor fuel from coal, which shed 16 percent.

The following is a list of important events taking place in South Africa next week:

Event                                                    Date
FNB/BER third quarter consumer confidence index         Oct. 6
Adaptit Holdings Ltd. first-half earnings               Oct. 6
Release of gold and foreign currency reserve data       Oct. 7
Allied Electronics Corp. Ltd. first-half earnings       Oct. 7
PSG Group first-half earnings                           Oct. 7
Release of South African corn export data               Oct. 7
Release of South African grain delivery data            Oct. 8
South African manufacturing data                        Oct. 8
South African BER inflation expectations survey         Oct. 9
South African interest rate decision                    Oct. 9
Release of South African monthly mine production data   Oct. 9

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net