South African economy needs rate cut

The South African Reserve Bank's rate decision is likely to announce this week. On the one hand, the economy needs a monetary policy easing in order to accelerate the growth rate, but the central bank is under dilemma. 

However, due to the poor performance of South Africa rand, a rate cut is not feasible, even though many analysts suggesting for a rate hike. From the point of view of improving the credibility, expansionary monetary policy would not be a bad decision. 

"However, should consumer prices turn out to be moderate today that would also be a signal for the market that constant interest rates would be appropriate", states Commerzbank.