eBusiness Weekly
Bloomsburg
“We are focused on the outlook for the South African economy for both growth and inflation. The job is not yet done,” Lesetja Kganyago told Bloomberg Surveillance in Jackson Hole, Wyoming last week.
His comments came just days after data from the statistics office showed South Africa’s inflation had eased to a two-year low of 4.7 percent in July from 5.4% the month before.
The Reserve Bank’s monetary policy committee held interest rates at 8.25% last month after raising borrowing costs by a combined 475 basis points at its 10 prior meetings. It aims to bring inflation back to the 4.5 percent midpoint of its target range, where it prefers to anchor expectations.
The central bank expects inflation to average 6 percent this year, 5 percent in 2024 and 4.5 percent in 2025.
“On the horizon, we actually see the exchange rate as one of the risks to the inflation outlook. So if there was to be a weakness in the currency, it does have implication for the inflation outlook,” he said. He also qualified that comment slightly by noting that the bank’s research has found the pass-through effect of currency weakness to price pressures has moderated.
The rand has depreciated almost 9% against the dollar this year, making it the fourth-worst performing emerging market currency of those tracked by Bloomberg.
