RATINGS AGENCY
Moody’s backs Reserve Bank’s ‘justified’ cut in interest rate
Ratings agency Moody’s has come out in support of the Reserve Bank’s recent surprise decision to cut interest rates, saying that it was justified by economic circumstances and that the Bank’s independence remained strong despite political pressure. But the agency, which has SA on review for a downgrade, said it remained concerned about the country’s deteriorating institutional strength and warned that without "decisive structural reforms" economic growth would remain subdued in the medium term and would continue to put pressure on ratings. The comments came in a report Moody’s issued on Monday titled "Policy rate cut supports near-term growth recovery, but structural constraints still impede medium-term outlook", in which it noted that the rate cut marked an important reversal in SA’s monetary policy stance and it should support short-term cyclical growth. In June, Moody’s flagged the gradual deterioration of SA’s institutions as one of the factors that could lead to a downgrade, al...
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