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No guarantee economy will respond to monthly meetings

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MBABANE – There are no guarantees that the economy will be responsive to the Central Bank of Swaziland’s decision to review its monetary policy stance on a monthly basis.


The Central Bank of Swaziland decided to follow the decision taken by the South Africa Reserve Bank (SARB) to meet every month to review its monetary policy stance. The recent meeting was held on April 30, 2009 where the bank decided to cut interest rates by 100 basis point, from nine per cent to eight per cent. 


A lot of other central banks worldwide have made massive cuts in interest rates in trying to stimulate their economies.
According to the Central Bank of Swaziland’s (CBS) Annual Policy Statement of March 2009 with the expectation that later this year, the financial sectors in more developed countries would be responsive to the measures taken by major central banks  and that this could set a stage for recovery.
“As the global financial crisis on the economy began to be evident, the policy stance has been that of relaxing interest rates to underpin the stimulus measures in some limited way.

Volatile

“The discount rate was reduced by 150 basis points between December 2008 and February 2009. Given the volatile movements in major economic aggregates that sustain our economies, the Central bank of Swaziland will follow the South African Reserve Bank’s decision to review its monetary policy stance on a monthly basis,” reads the report in part.
It adds; “There are no guarantees that the economy will be responsive to these measures however, with the expectation that in the latter part of 2009, the financial sectors in more developed countries would be responsive to the measures taken by central banks, this may set a stage for recovery through the impetus created by our stimulus programme.”


It further says given the fact that Swaziland continued to receive limited inflow of Foreign Direct Investments (FDI), stimulus measures would be a solution for growth generation through domestic measures, rather than a growth solution dependent on external sources of investment.

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