Junk fear likely to block cut in interest rates
Downgrade could see sharp rise in inflation
Economists are back at the drawing board as mounting risks to inflation have likely scuppered chances for further interest rate cuts this week and early next year. The widely expected downgrade by ratings agencies on Friday could see the rand weaken further and inflation rise, and with it interest rates. In Brazil, inflation surged past 10% after Moody's become the third agency to junk the country in February last year. Fears of a downgrade have intensified with the resignation this week of Michael Sachs, head of the budget office at the National Treasury. Rumours of further resignations of senior staff have raised concerns over stability at the Treasury, especially when the country is struggling to keep debt under control and the budget deficit stable. Xhanti Payi, head of research at Nascence Advisory and Research, said: "If they [the ratings agencies] are hearing everything else and they are buying everything that we've been reading, I can't see that they don't downgrade, because...
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