Credit growth may force bank's hand
May 31, 2007
Johannesburg - The rate of growth of South Africa's broad M3 money supply measure rose by 22.27 percent in the year to end-April from 20.02 percent in the year to end-March, the South African Reserve Bank said.
Credit extension to the private sector (PSCE) grew at a rate of 25.08 percent year-on-year (y/y) from 24.18 percent in March.
According to the new definition, which excludes loans made to provincial governments, credit extension growth was at 24.38 percent from 24.19 percent in March.
South Africa's total domestic credit extension had a growth rate of 25.16 percent y/y in April from 23.79 percent in March.
Total loans and advances, which is PSCE excluding investments and bills discounted, recorded a 27.37 percent y/y increase from March's 26.29 percent rise.
The bank's international liquidity position rose to $24.593 billion in April from $23.970 billion in March.
M3 was expected to have increased slightly to 21.5 percent y/y, a survey by I-Net Bridge found.
The rate of PSCE was expected to have increased at a slightly slower pace of 23.9 percent.
Forecasts among the 13 economists surveyed for M3 ranged from 20.4 percent to 22.6 percent, while the range of forecasts among the 14 economists surveyed for PSCE was from 22.9 percent to 24.6 percent at the top of the range.
Overall credit was at 22.3 percent in June 2006 when interest rates were first hiked by 50 basis points and went as high as 26.8 percent in November. - I-Net Bridge
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