Projections of rate hikes too steep – Marcus

Forecasts by some analysts that policymakers would raise the repo rate an extra 200 basis points in the coming year were overdone, Reserve Bank governor Gill Marcus said yesterday. Past tightening cycles were not a good guide for the future, Marcus said. The market reaction when the repo rate was raised 50 basis points to 5.5 percent in January was extreme, she said. “I indicated recently that I thought that the market expectation of a further 200 basis points increase over the coming year sounded overdone, and I still believe this to be the case,” Marcus said. “However, we also stressed that future moves are highly data dependent in the current circumstances of heightened uncertainty.” The central bank unexpectedly increased the repo rate in January for the first time in more than five years as concern mounted that the rand’s 22 percent decline against the dollar would push inflation above the 6 percent ceiling of the target band. Marcus said the Reserve Bank could not give unconditional commitments of future policy moves and could only indicate its assessment of risks. “It does not mean there will be adjustments at every meeting or that if rates are increased, that they will be increased by the same amount.” – Bloomberg

Barloworld seeks to sell Oz business

Transport group Barloworld was in advanced talks to sell its Australian vehicle retail business, it said shortly after the stock market closed yesterday. Barloworld, which runs seven vehicle showrooms in Sydney and Melbourne, did not say who it was talking to or how much the business could fetch. The company said the deal fell below the JSE’s transactions threshold for mandatory disclosure or shareholder approval, indicating the value would be less than 5 percent of its market capitalisation. – Reuters