PRETORIA (Reuters) – Below are some quotes from South African Reserve Bank Governor Lesetja Kganyago at a news conference to announce the central bank’s latest interest rate decision.
INFLATION
“While inflation is still in the bottom half of our target range, it has edged higher over the past few months.”
“We continue to see low inflation for goods, which is likely to be temporary. Services inflation is somewhat higher, but still below the 4.5% target midpoint. Inflation expectations are close to the midpoint. For now, inflation appears contained.”
“A marginally lower inflation outlook … is mainly due to the better fuel-price projections. It also reflects a more benign path for administered prices, given the lower electricity tariffs announced by NERSA in February.”
“These factors offset pressure from the proposed VAT increases, which we think will add about 0.2 percentage points to headline inflation.”
“We see risks to this forecast on both the upside and the downside, with the balance of risks in the medium term skewed to the upside.”
ECONOMIC GROWTH
“The overall growth picture (for last year) was disappointing. … Growth for 2024 as a whole was 0.6%, marginally below our expectations, and slightly worse than in 2023.”
“We have now revised down our 2025 growth forecast slightly, to 1.7%, while leaving the outer years unchanged. We attribute lower growth partly to subdued demand, and partly to lingering supply-side fragilities.”
“We assess that the risks to growth are to the downside.”
DECISION
“Against this backdrop, the MPC (Monetary Policy Committee) decided to keep the policy rate unchanged, at 7.5%. Four members preferred this action, while two favoured a cut of 25 basis points.”
“For several quarters we have enjoyed rising confidence in South Africa, with a smaller country risk premium and lower bond yields. However, the global economy is not on a stable footing and there are also domestic uncertainties, which put these favourable trends at risk. This calls for a cautious policy approach.”
(Compiled by Alexander Winning)
