·         Growth in broad money supply (M3) rose to 6,7 % y-o-y in January from 5,2 % in December, slightly higher than the consensus forecast of 6,1 %. Over the month, M3 declined by 0,1 %, with the rise in net foreign assets and net claims on the government sector (up by R41,0 billion and R13,1 billion respectively), more than offset by declines in net other assets and liabilities (down R40,5 billion) and claims on the private sector (down R15,0 billion)

·         Private sector credit extension (PSCE) growth eased to 8,6 % y-o-y, slower than the consensus forecast of 10,3 % from 10,1 % in December. Over the month, corporate demand fell by 1,8 % (up 7,5 % y-o-y), while households demand rose by 0,6 % (up 9,9 % y-o-y).

·         Investments and bills fell sharply in January, down 3,8 % m-o-m, following two months of expansion. Mortgages and 'other loans and advances' also declined over the month, while instalment sales and leasing finance, in contrast, increased.

·         Growth in household credit is likely to be subdued this year as consumer confidence remains weak due to the poor economic outlook, high existing debt as well as strict lending standards. Business confidence will also be hurt by the poor outlook, which will make firms to be reluctant to commit on large capital spending.

·         With the poor economic outlook, we believe that the MPC will keep monetary policy neutral over an extended period, with interest rates remaining unchanged for most of 2013, and a reversal in policy easing likely only late in the year or even in 2014.