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The Monetary Policy Committee (MPC) of the SA Reserve Bank starts its two-day meeting today and will announce any changes to the repo rate tomorrow. The outcome will indicate whether Governor Marcus' recent signals to the market, and its interpretation of what she says, are consistent. The former Governor, Tito Mboweni, was sharply criticised for suggesting one direction and then apparently pursuing another and thus "surprising" the market - something that tends to be unsettling with both analysts and investors.

Since taking over as Governor, Gill Marcus has sought a more transparent approach. She recently indicated that steady rates can be expected for some time, and this has been interpreted as a signal that no further reductions will be made to the rate. Although the rate cut in March was unexpected, it was the right decision, given subsequent macroeconomic data. The letter of "clarification" of the SARB's mandate from the Minister of Finance to the Governor caused some uncertainty over how it would be interpreted, but it does now appear that economic growth prospects will be factored into the equation.

Data on unemployment, released last week, indicates that our economy was still shedding jobs in the previous quarter and points to the reality that our economic recovery is slower than anticipated. Looking forward, significant inflationary pressure does exist and this would inhibit any view to cut the repo rate, yet growth is sluggish and the CPI is currently on the decline. The MPC decision tomorrow will test whether Marcus' approach to transparency adds to or subtracts from her relationship with market analysts.