Kganyago: Inflation in check for now but threats remain

South African Reserve Bank Governor Lesetja Kganyago announced on Thursday that the reserve bank had decided to keep the repo rate unchanged at 3.5%.

FILE: South African Reserve Bank Governor Lesetja Kganyago. Picture: AFP

JOHANNESBURG - South African Reserve Bank Governor Lesetja Kganyago said that inflation looked set to remain around the centre mark of the bank's target of three to six percent.

He announced on Thursday that the reserve bank had decided to keep the repo rate unchanged at 3.5%.

He said that inflation looked set to remain stable.

"Headline consumer price inflation is revised slightly higher to 4.4% and remains unchanged at 4.2% in 2022 and 4.5% in 2023.

"With largely unchanged inflation expectations and even with continued upside risks, the committee expects inflation to stay close to the mid-point over the forecast period."

But Kganyago has warned that the situation could change as oil and the rand exchange rate could affect the overall picture.

"Oil prices have become more volatile in recent weeks and could rise beyond our expectations. Electricity and other administered prices continue to present short-term risks."

Kganyago said that South African households were continuing to show improved expenditure, an encouraging sign after the country battled a number of harsh lockdowns due to COVID-19.

The governor said that despite the July looting and violence, the economy was growing.

"We expect the economy to grow by an upwardly revised 5.3% this year (from 4.2%), despite the much larger negative effect on output than was previously estimated from the July unrest."

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