Kganyago warns SA rate cut is no sure thing | Fin24
  • Glencore

    The world’s biggest commodities trader is being investigated for bribery by UK authorities.

  • South African Airways

    Trade union Solidarity wants the airline's ex-chief Vuyani Jarana on board for business rescue.

  • Ferial Haffajee

    Why Minister of Public Enterprises Pravin Gordhan’s patriotism call to fly SAA flopped.


Kganyago warns SA rate cut is no sure thing

Apr 20 2018 10:39
Onur Ant and Francine Lacqua, Bloomberg

Johannesburg - South African Reserve Bank Governor Lesetja Kganyago said it’s important to reduce consumer price expectations, signaling that last month’s drop in the inflation rate to a seven-year low is unlikely to prompt easier monetary policy.

“We would prefer that inflation expectations are closer to 4.5%,” Kganyago said in an interview with Bloomberg Television in Washington. “That will build a cushion for South Africa because there are risks on the horizon.”

The bank’s inflation forecast for the next 18 to 24 months is about 5%, “not quite where we would like it to be but within our target band,” he said. The central bank shoots for inflation of 3% to 6%.

Policy makers in Africa’s most-industrialised nation are overseeing a pickup in economic growth and a slowdown in price increases, with the annual inflation rate falling to 3.8% in March.

That combination may soon come to an end as price gains are expected to accelerate, Kganyago said. According to a model used by monetary policy makers, the gap between actual and potential economic output is quickly closing, he said, adding that’s not good for the inflation outlook.

The Monetary Policy Committee last month cut the repurchase rate by a quarter percentage point to 6.5%, the lowest level in two years.

* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.



Company Snapshot

Voting Booth

What do you think about private healthcare in SA?

Previous results · Suggest a vote