Old Mutual chief wants interest rates kept down

“THERE is no need to increase short term interest rates this year,” Johannes !Gawaxab, chief executive officer of Old Mutual Namibia said yesterday when he reviewed the performance of local financial markets at a breakfast presentation in Windhoek.

!Gawaxab said that the Namibian dollar (rand) was likely to remain strong against the US Dollar over the next three to six months. He said this was expected to negatively influence the local export industry and economic growth.”Given the view of a finer Euro strength against the US Dollar, the firmer commodity prices and interest rate differentials, we expect the Namibia Dollar to remain stable and to trade within 6,5 and 7,5 range against the US Dollar over the short term,” he elaborated.!Gawaxab said for inflation an uptrend had been observed driven by food prices, oil prices and the currency movements.”In the short term, we expect a moderate uptrend in the local inflation rate,” he said.Reasons he gave for not increasing the short term interest rate are the strong Namibia Dollar, easing oil prices and high real estate prices.”Inflation pressures, the current account deficit and credit growth may force monetary authorities to hike interest though,” he warned.As for the market forecast, !Gawaxab said he expected equities to outperform bonds and cash this year, “although domestic equities have re-rated since April 2003 on the back of rising commodity prices, synchronised global economic growth and rising global equity markets, equities are likely to find support from corporate earnings, lower interest rates and economic growth.”According to Nampa, !Gawaxab advised local business people to consider exporting their products to China.He said the demands by China were increasing due to growth in the global economy, saying that the economy is slowing down in that country.He said this was expected to negatively influence the local export industry and economic growth.”Given the view of a finer Euro strength against the US Dollar, the firmer commodity prices and interest rate differentials, we expect the Namibia Dollar to remain stable and to trade within 6,5 and 7,5 range against the US Dollar over the short term,” he elaborated.!Gawaxab said for inflation an uptrend had been observed driven by food prices, oil prices and the currency movements.”In the short term, we expect a moderate uptrend in the local inflation rate,” he said.Reasons he gave for not increasing the short term interest rate are the strong Namibia Dollar, easing oil prices and high real estate prices.”Inflation pressures, the current account deficit and credit growth may force monetary authorities to hike interest though,” he warned.As for the market forecast, !Gawaxab said he expected equities to outperform bonds and cash this year, “although domestic equities have re-rated since April 2003 on the back of rising commodity prices, synchronised global economic growth and rising global equity markets, equities are likely to find support from corporate earnings, lower interest rates and economic growth.”According to Nampa, !Gawaxab advised local business people to consider exporting their products to China.He said the demands by China were increasing due to growth in the global economy, saying that the economy is slowing down in that country.