Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Marcus Says Investors Can’t Assume S. Africa Rate Cuts

Gill Marcus, governor of the South African Reserve Bank. Photographer: Stephane De Sakutin/AFP/Getty Images
Gill Marcus, governor of the South African Reserve Bank. Photographer: Stephane De Sakutin/AFP/Getty Images

Nov. 1 (Bloomberg) -- South African Reserve Bank Governor Gill Marcus said investors shouldn’t assume the central bank will automatically cut interest rates as she weighs inflation risks against weaker economic growth.

Policy makers remain ready to act in “whatever way is necessary,” Marcus said in her first interview with Bloomberg TV at her offices in Pretoria, the capital, yesterday. The bank’s primary responsibility is to control inflation, she said.

“It shouldn’t be seen as foregone that we would automatically react to stimulus in relation to growth when you have inflation issues that seem to be coming through,” Marcus, 63, who will mark her third year in office this month, said.

The Reserve Bank is trying to ward off inflation threats while supporting an economy that’s set to expand at its slowest pace since a 2009 recession. In July, the bank surprised economists by reducing the benchmark interest rate for the first time in 20 months. The growth outlook has deteriorated since then as the worst labor unrest in almost two decades slashed mining exports while fuel prices and a weaker rand threaten to push inflation outside of the bank’s 3 percent to 6 percent target band.

“We would weigh it very carefully,” Marcus said, referring to interest rate cuts. “We can introduce stimulus if we think it is appropriate. But we do have to take all the factors into account.”

Rate Expectations

Marcus’s comments come as central banks around the world move to shore up their economies to protect against slowing global growth. Policy makers in Israel, Hungary and the Czech Republic surprised economists in the past week by reducing borrowing costs. South Africa’s central bank kept the key rate unchanged in September at 5 percent, the lowest level in more than 30 years.

Inflation accelerated for a second month to 5.5 percent in September, driving up bond yields as investors reduced bets the central bank will lower borrowing costs again this year. The yield on the security due in 2021 rose six basis points to 6.68 percent since Oct. 23, the day before the consumer price data was released.

Marcus’s comments helped to reduce expectations of interest rate cuts, said Gina Schoeman, an economist at Citigroup Inc. Forward-rate agreements starting in six months, which investors use to speculate on interest rates, jumped four basis points to 4.92 percent as of 5:14 p.m. in Johannesburg.

Growth Forecasts

“The upside risks are coming through” to inflation, Schoeman said in an interview in Pretoria. “It is going to start threatening the 6 percent target ceiling.”

The Reserve Bank has cut its growth forecast thrice this year to 2.6 percent as a debt crisis in Europe curbs demand from a region that buys about a third of South Africa’s manufactured exports. The economy expanded 3.1 percent in 2011.

Slower growth “is an area of concern, primarily from the advanced economies,” Marcus, the nation’s first female central bank governor, said. “If the euro zone is not growing, it impacts in many areas.”

Strikes since August that shut operations owned by Lonmin Plc, Anglo American Platinum Ltd. and Gold Fields Ltd. have worsened the outlook. The gold and platinum mining industry has lost 10.1 billion rand ($1.16 billion) in production this year because of the stoppages, the National Treasury said on Oct. 25.

Rand Slumps

The rand gained 0.2 percent to 8.66 against the dollar at 5:25 p.m. in Johannesburg. The currency has plunged 6.6 percent since the strikes began on Aug. 10, the worst performer of 16 major currencies tracked by Bloomberg.

“Unless the currency starts to find some favor and stronger ground very quickly, it is very unlikely” the central bank will lower borrowing costs again, Schoeman said.

Speaking from the balcony of her office in downtown Pretoria, where the evening call to prayer could be heard from a nearby mosque, Marcus said her biggest concern relating to the strikes was job losses.

Lonmin ended a six-week illegal strike at its Marikana platinum mine by giving workers pay increases of as much as 22 percent. The company said yesterday it may fire workers. Anglo American Platinum, Gold Fields and AngloGold Ashanti Ltd. also announced job cuts in the past two months.

“The strikes for us are very concerning,” the governor said. “There is definitely an impact, third quarter we will see the numbers coming through.”

To contact the reporters on this story: Olivia Sterns in London at; Andres R. Martinez in Johannesburg at

To contact the editor responsible for this story: Nasreen Seria at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.