The central bank targets inflation in a range of three per cent to six per cent, but has made it clear it prefers price growth close to the mid-point.
Thursday 07, March 2019
(Bloomberg) –The Governor of South Africa Reserve Bank (SARB) said that he wants to see sustainably lower inflation to ensure cheaper borrowing costs in the economy,
Lesetja Kganyago, the Governor of SARB, “We have indicated that a consistently lower rate in the near term, at the midpoint of our target band -- 4.5 per cent -- would lower long-term interest rates and be more supportive of balance in the economy.”
The central bank increased its key interest rate for the first time in more than two years in November, even as the economy had just come through a recession and hasn’t expanded at more than two per cent annually since 2013.
Growth in GDP slowed to 0.8 per cent last year and the governor said that the central bank’s 1.7 per cent growth projection for the year did not include the impact of power cuts, which may hurt output.
The Monetary Policy Committee held the rate at 6.8 per cent in January as plunging crude costs and rand gains improved the bank’s price-growth outlook, it will announce its next decision on 28 March.
The case for the existing inflation-targeting framework is very strong because it helped to bring down price growth and interest rates, said Kganyago.