With this counter-cyclical accommodative monetary policy, as it is known, BoB will seek to support private sector growth during 2012, particularly in non-mining, through the lowering of interest rates.Although any interest rate reduction will be dependent on the attainment of delicate inflationary targets, BoB says the new policy stance is geared towards plugging the gap caused by a reduction in government spending this year. "Fiscal policy (in 2012-13) may not stimulate output growth,"said the director of BoB’s Research Department, Kealeboga Masalila, yesterday.
"It may perhaps slow the current levels of growth or generate lower rates of growth. Monetary policy will take the slack. Under the counter-cyclical policy stance, we are trying to be more aggressive in supporting growth."Following the launch of this year’s Monetary Policy Statement on Monday, analysts were anxious to know what differences the new policy stance would have from the previous neutral policy.It is under the neutral monetary policy stance that BoB has held the bank rate at 9.5 percent since December 2010, with commercial banks pegging the prime lending rate at 11 percent. “Counter-cyclical means you are stimulating the economy where, for example, you see movements towards low growth rates and undertake to counter that,” Masalila explained.
