Reserve Bank Governor Tito Mboweni sidestepped questions on whether an interest rate cut is imminent, saying that economic growth in SA this year could either be "slightly" above or below official forecasts.

Falling commodity prices and the gap between SA's actual and potential growth rate of 4.5 percent would help inflation come down "quite significantly" this year, he said at a gathering hosted by the Swiss Chamber of Commerce on Thursday.

There was a possibility of a "slight improvement" or "slight contraction" in the 1.2 percent rate of growth the Treasury expected SA to clock up this year, in the face of global recession.

But Mboweni declined to elaborate on his suggestion early this month that the Bank's Monetary Policy Committee (MPC) may convene ahead of its scheduled April meeting if growth data due next week were dismal. "I've got the central bank's own forecast of Q4 GDP (fourth-quarter gross domestic product)."

Mboweni said he also had the Bank's forecasts for growth in the first and second quarters of this year. "I'm afraid you'll have to hypnotise me before I can tell you what they are," Mboweni said in reply to a question on what it would take for GDP figures due from Statistics SA early next week to prompt an early MPC meeting.

Economy contracted for the first time since 1998

Analysts say the economy contracted for the first time since 1998 in the fourth quarter, and may slip into a recession this year.

Markets have priced in a full percentage point cut in the repo rate after the official figures are released, followed by another of the same size in April.

Since December, the Bank has lopped 1.5 percentage points off the repo rate in two stages, taking it down to 10.5 percent, as concern mounted about the effect of the global recession on SA.

Mboweni dwelt at length on the worsening international backdrop in his remarks last night. But he said that SA's deficit on the current account, its broadest measure of trade, was likely to have shrunk late last year.

Mboweni dismissed talk that Zimbabwe would adopt the rand as legal tender, saying that neither the country's central bank nor finance minister had approached him on the issue.

"I have read about it in the newspaper. No one has approached me for a discussion about it ... as far as I am concerned it is a rumour," he said.

Mboweni highlighted problems Zimbabwe would have to tackle before it could adopt the rand.

Zimbabwe's authorities would have to have a rand in reserve for every rand that circulated in the country, and that would be "quite a task". Zimbabwe's economy would also have to undergo a "substantial transformation" to restore its lost productive capacity, he said.

Zimbabwe's economy has ground to a virtual halt after a decade of recession, with inflation so steep it can barely be recorded while its people live on income from citizens working abroad.

Business Day