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Johannesburg - The South African Reserve Bank (Sarb) could change its monetary stance because of rising risks to the inflation outlook and a likely rate hike in the US by year-end, the bank's deputy governor Daniel Mminele said on Friday.
"Inflation risks have increased, which suggests an unchanged monetary policy stance cannot be maintained indefinitely," Deputy Governor Daniel Mminele told a monetary policy conference in Johannesburg.
The SARB has kept its benchmark repo rate steady at 5.75% since July last year.
The bank has however signalled since its last monetary policy meeting in May that rising oil prices, above inflation wage settlements and a weaker rand currency could stoke inflation and bring a rate rise in coming months.
Deputy Governor Daniel Mminele told a monetary policy conference in Johannesburg that domestic factors, mainly electricity tariff hikes of around 20% due later in the year, would compound upside risks to inflation.
"Inflation risks have increased, which suggests an unchanged monetary policy stance cannot be maintained indefinitely," Mminele said.
READ: Interest rate hike before end of year - expert
"We at the SARB are mindful of our mandate and committed to achieving our inflation target in the interest of balancing the systemic growth constraints," Mminele said.
At its monetary policy meeting in May the central bank said it expected headline inflation to breach the upper band of its target of 6% in Q1 of 2016.
Headline consumer prices, currently at 4.5%, have risen in the past two months having dipped below 4% in March on the back of the sharp fall in global oil prices.
