Jaanre Fourie, an economic analyst at Metropolitan Asset Managers (MetAM), reckons that the best approach to monetary policy right now would be to frontload the interest rate cuts by cutting 100 basis points at each of the next two monetary policy committee meetings.

"We can then revert to 50 basis point cuts and a more conservative wait-and-see approach," she said on Friday in MetAM's monthly inflation report for March.

In recent history, Fourie pointed out, the MPC preferred a conservative approach. In February this year, for the first time since 2003 the MPC opted to adjust the repo rate by more than 50 basis points – they cut the rate by 100 basis points.

"However, the committee has clearly displayed its willingness to follow other central banks and act more aggressively," she said. "It seems as if the MPC has realised that if it waits too long, the impact of the rate cuts will be too late to provide relief to the ailing economy. In the previous cutting cycle, the repo rate was cut by five percentage points in five months after the MPC arguably waited too long to start cutting rates."

She suggests that while economic growth is not explicitly part of the Reserve Bank's mandate, it seems as if growth considerations have become increasingly important in MPC interest rate meetings.

But she adds that towards the end of the year, monetary policy will again focus on the inflation.

"The sharp drop in commodity prices will be an important factor in the inflation outlook for 2009," she said, "especially the decline in the prices of crude oil and food."

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