Azar Jammine, director of Econometrix, pointed to anecdotal evidence that local banks are refusing to lend to customers, even creditworthy ones, despite the fact that South Africa's financial system has remained relatively insulated from the global financial crisis.
Jammine says that in a case like this hasty interest rate cuts will solve nothing. "If the real reason we are not seeing business activity is because banks are reluctant to lend, then cutting interest rates will not give the economy the boost people are expecting," says Jammine.
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