JOHANNESBURG – The rand yesterday plunged nearly 2 percent as first quarter gross domestic product contracted the most since 2009, putting the SA Reserve Bank under further pressure to loosen its monetary policy at its meeting next month to stimulate growth. The fall saw banking stocks also tumbling, wiping billions of rand in value as Statistics South Africa said its data showed that the economy shrank 3.
Only three sectors – government services; personal services; finance, real estate and business services – showed growth. Ashbourne said given downbeat survey data for the second quarter, it was possible that the economy fell into another technical recession over the first half of the year. “We’ve long believed that the next move will be a cut, and have pencilled in a 25 basis point reduction in the key rate at July’s Monetary Policy Committee meeting.”
“The answer is simple – Sarb has to cut interest rates. And it needs to do it sooner rather than later to not stand as victim of weakening global demand for goods. Sarb does have the envy of other central banks at its hands in that it can ease monetary policy, should it choose to do so,” Ahmad said.
Not sure if that’s a “plunge”
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