South Africa's trade deficit widened in October and credit growth slowed less rapidly than forecast, data showed on Friday, denting the case for an early interest rate cut which had been boosted by lower inflation.
Traders say markets are still pricing in a rate cut in December after 500 basis points of increases since June 2006, after data earlier this week showed a sharper-than-expected cooling of inflation and a big slowdown in economic growth.
But economists believe Friday's trade and credit growth numbers could have tipped the balance back towards a February cut instead. South Africa's Reserve Bank has steadily lifted its key repo rate over the past two years to 12 percent, to rein in consumer price rises that surged above the top end of a 3-6 percent target band, though it left rates unchanged in August and October.
On Thursday, central bank Governor Tito Mboweni said the inflation outlook has improved, before repeating worries about a weaker rand. According to Friday's data, private sector credit growth slowed only slightly to 16.17 percent year-on-year in October, against the 15.4 percent forecast by economists in a Reuters poll last week, while M3 money supply quickened to 15.59 percent. "Its not a good figure; higher than expected," said Efficient Group economist Fanie Joubert. "We've seen nice inflation figures this week, but credit growth is still relatively high.
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