EXCERPTS-South African central bank comments as rates kept on hold

PUBLISHED: Thu, 25 Mar 2021 13:37:10 GMT
Olivia Kumwenda-Mtambo and Mfuneko Toyana

JOHANNESBURG, March 25 (Reuters) – Below are some quotes from South African Reserve Bank Governor Lesetja Kganyago on Thursday as he announced the central bank’s decision to keep its benchmark repo rate at 3.5%.


“The overall risks to the inflation outlook appear to be balanced. A more appreciated nominal exchange rate in recent months, and generally low pass-through, is expected to continue to moderate some inflationary pressure.”

“While global food price inflation remains high, local food price inflation is slightly lower than previously expected and should remain broadly contained due to higher local crop production. Oil prices have increased sharply this year and are expected to remain at these levels over the forecast horizon. Electricity and other administered prices remain upside risks to the inflation trajectory.”


“South Africa’s economy expanded by 6.3% on a quarterly, annualised basis in the fourth quarter of 2020, and contracted by 7% for the year as a whole. The Bank’s forecast for GDP for the first quarter of 2021 stands at -0.2%, down from 1.0% at the time of the January MPC meeting. With stronger quarterly outcomes for the rest of this year, the economy is expected to grow by about 3.8% (up from 3.6%).”

“GDP is expected to grow by 2.4% in 2022 and by 2.5% in 2023, unchanged since the January meeting. Overall, risks to the domestic growth outlook are assessed to be balanced.”


“Unless the risks outlined earlier materialise, inflation is expected to be well contained in 2021, before rising to around the midpoint of the inflation target range in 2022 and 2023.”

“Against this backdrop, the MPC decided to keep rates unchanged at 3.5% per annum. The decision was unanimous.”

“The implied policy rate path of the Quarterly Projection Model indicates an increase of 25 basis points in each of the second and fourth quarters of 2021. Compared to the previous meeting, the shift in the rate path from the third to the fourth quarter is due to somewhat lower inflation in 2022.” (Reporting by Olivia Kumwenda-Mtambo and Mfuneko Toyana; Editing by Hugh Lawson)

(c) Copyright Thomson Reuters 2021. Click For Restrictions – https://agency.reuters.com/en/copyright.html

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