Gill Marcus, governor of the Reserve Bank, made a sudden announcement yesterday that she was not available for reappointment and delivered her swansong by keeping interest rates at 5.75 percent.
Marcus said the domestic growth outlook remained weak, following a contraction of -0.6 percent in the first quarter and growth of 0.6 percent in the second quarter. She said this pace was indicative of a widening output gap.
“Partly as a result of this outcome, as well as the expected impact of the metalworkers’ strike in July, the bank’s forecast for GDP growth for 2014 has been revised down further to 1.5 percent, from 1.7 percent previously, with the risks still assessed to be on the downside.”
Marcus said the forecasts for both 2015 and 2016 had been revised down by 0.1 percentage points to 2.8 percent and 3.1 percent respectively.
Marcus said domestic sector expenditure had deteriorated further, and, together with continued moderation in household consumption, was indicative of the lack of demand pressures in the economy.