S.Africa's Mboweni keeps options open on rates meeting

By Stella Mapenzauswa

JOHANNESBURG (Reuters) - South Africa's central bank Governor Tito Mboweni kept the market guessing on Thursday about a possible urgent interest rate meeting after data this week showed a contracting economy and slowing inflation.

Markets have been speculating Mboweni might call an emergency meeting after Statistics South Africa said on Tuesday the economy contracted by a sharper than expected 1.8 percent in the fourth quarter of 2008, raising concern it was headed for recession.

On Thursday Stats S.A. said producer price inflation cooled to 9.2 percent year-on-year in January from 11.0 percent in December, a day after data showed the CPI inflation rate targeted for monetary policy slowed to 8.1 percent, albeit less than the expected 7.5 percent.

Despite the data, Mboweni did not make the announcement of an emergency monetary policy committee (MPC) meeting that some market players anticipated.

"There's no meeting that has been called but the MPC can meet any time. If it is to meet, we need to make sure people are informed about it," Mboweni said.

"If in the view of the MPC inflation going forward is looking much better, it can decide to look at rates ... it is very difficult to make monetary policy decisions, we agonise over these things."

The central bank increased interest rates by 500 basis points between June 2006 and June 2008 to try to rein in inflation, but has cut them by 150 basis points since December, as the economy wilts along with global demand.

Mboweni said earlier this month, shortly after announcing a full percentage point cut in the repo rate to 10.5 percent, that the policy committee might meet before the scheduled April gathering if economic data called for it.