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Cape Town - South African monetary policy may remain favourable to the economy and inflation expectations are still "anchored well within" the central bank's target range, chief economist Monde Mnyande said on Thursday.
"I think there is a possibility of monetary policy
remaining, together with other things, favourable to the South African economy.
That is the answer," he said.
Annual headline inflation quickened to 4.6% in May from 4.2% in April, coming in above market expectations but well within the Reserve Bank's 3% to 6% target band.
"If you want to know the answer of the MPC (Monetary
Policy Committee) coming forward, definitely the inflation expectations remain
anchored well within the target range," Mnyande said at a presentation on
long-term monetary policy.
However, the bank expects inflation to briefly breach the
target to peak at 6.3% in the first quarter of 2012, mainly due to higher oil,
food and administered prices.
It has kept the repo rate steady at 5.5% at its previous
three policy setting meetings this year, after a 650 basis-point cutting cycle
in the two years to December 2010.
Analysts expect the bank to hike rates but are divided on
the timing. Some see a rise in the fourth quarter of this year, while others see
the MPC holding off until next year.
Mnyande said on Tuesday the central bank would not raise
rates solely on the back of higher oil and food prices, and would take into consideration
all prices in the CPI basket.
Inflation has stayed within the target since February 2010.
