PRETORIA, Sept 22 Below are comments from South
African Reserve Bank Governor Lesetja Kganyago on Thursday as he
announced the central bank's latest decision on its benchmark
Higher inflation outcomes are forecast in the near-term
before a sustained return to within the target range in 2017.
The latest inflation forecast of the Bank has improved over the
first four quarters of the forecast horizon and remains more or
less unchanged for rest of the period.
Food prices remain a significant driver of inflation given
the persistent drought. Food inflation is expected to peak at
around 12.3 percent in the fourth quarter of this year.
While the second quarter growth performance was more
favourable, data for July suggest that this improvement is
unlikely to be sustained in the third quarter.
The marked appreciation of the rand during the past few days
appears to be driven by expectations of unchanged US monetary
policy, as well as to speculation regarding possible purchases
of rand related to a major M&A transaction.
The rand, however, remains vulnerable to future changes in
the US monetary policy stance, domestic political developments
as well as to a risk of a possible ratings downgrade
later in the year.
Given improvements in the inflation forecast, the weak
domestic economic outlook and the assessment of the balance of
risks, the MPC has unanimously decided to keep the repurchase
rate unchanged at 7.0 percent per annum.
The MPC remains concerned about the overall inflation
trajectory which remains in the upper end of the inflation
(Compiled by Tiisetso Motsoeneng)