Africa-Press – South-Africa. South African borrowing costs will only be lowered when inflation’s retreat toward the midpoint of the central bank’s target range is sustained, Reserve Bank Governor Lesetja Kganyago said.
The bank officially targets price growth in a band of 3% to 6%, though its monetary policy committee prefers to anchor inflation expectations close to the midpoint of that range. It’s responded to the worst global inflation shock in a generation quicker than several of its peers and raised the policy rate by 275 basis points since November.
“Once you see inflation declining back within the target and moving toward 4.5%, which is what we actually aim for, that would be telling you that the interest rate cycle has done its job,” Kganyago said in an interview with Johannesburg-based broadcaster eNCA Tuesday. “If that is sustained, then it’s time to adjust policy.
The central bank said in its six-monthly Monetary Policy Review on Oct. 4 that an environment of heightened uncertainty with rising costs and domestic price pressures that have “intensified sharply” means policy makers may still need to raise interest rates to “levels that are consistent with a stable and lower inflation rate.”
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