PRETORIA, Nov 23 (Reuters) - 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 repo rate.
“The domestic economic growth outlook remains subdued but positive. Both consumer and business confidence remain low and are also likely to be affected by political developments in December.”
“Since the previous meeting of the Monetary Policy Committee upside risks to the inflation outlook have increased, mainly due to higher international oil prices and a weaker rand exchange rate.
“Despite a deteriorating in the forecast, inflation is expected to remain within the target range for rest of the forecast period.
“Wage growth continues to contribute to the persistence of inflation at higher levels.”
“The lead-up to the ANC (African National Congress) national elective conference and its uncertain outcome is also likely to continue to weigh on the currency.
“Domestic event risks, including rating agency reviews and the economic policy implications of the ANC electoral conference, are likely to dominate rand movements over the coming weeks.”
“Downgrades of domestic currency debt to sub-investment grade could lead to South African government bonds falling out of key indices which require investment grade. Such an event could trigger significant sales of domestic bonds by non-residents.
“Ratings reviews are expected imminently, but the extent to which any possible downgrades may already be priced in remains uncertain.
“The Medium Term Budget Policy Statement published in October revealed a rapidly deteriorating fiscal position.” (Reporting by Olivia Kumwenda-Mtambo and Alex Winning in Pretoria; Compiled by TJ Strydom; Editing by James Macharia)