Kganyago: Recent political events hurting economic outlook

The Reserve Bank governor says the benefits of stronger exchange rates and higher growth are being offset by the political situation in SA.

South African Reserve Bank governor Lesetja Kganyago. Picture: GovermentZA

JOHANNESBURG - Reserve Bank Governor Lesetja Kganyago says the political events of the past few days have impacted heavily on the rand, affecting inflation and in turn the overall economic outlook.

He announced earlier today that the repo rate will remain unchanged at 7%.

Kganyago also says GDP growth has been set at 1.2% for this year.

The governor says emerging markets are now benefiting from stronger exchange rates and higher growth, but this is being offset in this country by the political situation.

“While most measures of emerging market risks have narrowed over recent months, those for South Africa have widened again over the past few days."

He says the rand is being affected and therefore inflation and the bank needs to be cautious.

“The Monetary Policy Committee is of the view that we may have reached the end of the tightening cycle. However, the committee would like to see a more sustained improvement in the inflation outlook before reducing rates."

Kganyago says food inflation is decreasing, but overall business and consumer confidence remains low.

(Edited by Refilwe Thobega)