The South African Reserve Bank's approach to monetary policy in leaving interest rates unchanged on Thursday when other central banks worldwide are cutting rates was perfectly understandable, First National Bank CEO Michael Jordaan said.

"Our time will come," added Jordaan. "With South Africa's economy having weakened and inflation probably peaked, coupled with the Rand's exposure to world events, SARB's cautious approach to monetary policy is perfectly understandable.

"That said, it is important to state that South Africa remains largely insulated from the global financial crisis mainly as a result of the prevailing Exchange Control regulations," he said.

He added that, while he expects the economy to continue slowing down in the short to medium term – and South Africa is not alone in this as there are growth pressures across the globe – there is hope for the South African consumer.

Oil price comes off

The oil price has come off its record highs, resulting in two welcome fuel price reductions recently. "This bodes well for inflation; coupled with the much-awaited re-weighting of the Consumer Price Index (CPI) basket from February 2009," said Jordaan.

For now, the average South African consumer remains financially stretched and prudent management of one's financial affairs is strongly advised to avoid increased exposure to debt. With interest rates still on the high side, the environment is ideal of savings.

Following today's rate announcement, FNB's prime lending rate remains unchanged at 15.5 percent. FNB revises its savings and investment rates during weekly rates reviews and communicates updated interest rates on its website and in branches.

I-Net Bridge