An embossed logo of South Africa’s Reserve Bank sits on a document folder during a news conference with Lesetja Kganyago, governor of South Africa’s reserve bank, in Pretoria, South Africa, on Thursday, Nov. 20, 2014. Reserve Bank Governor Lesetja Kganyago kept South African borrowing costs unchanged in his debut policy meeting as Reserve Bank governor, reinforcing his pledge for continuity. Photographer: Dean Hutton/Bloomberg via Getty Images

JOHANNESBURG, Jan 27 (Reuters) – Below are some quotes from South African Reserve Bank Governor Lesetja Kganyago on Thursday as he announced the central bank’s decision to raise its repo rate by 25 basis points to 4.00%.

INFLATION

“The risks to the inflation outlook are assessed to the upside. Global producer price and food price inflation continued to surprise higher in recent months and could do so again.”

“Electricity and other administered prices continue to present short- and medium-term risks.”

“Given the moderate medium and long-term inflation projections set out above, higher domestic import tariffs, stronger services inflation, and higher wage demands present additional upside risks to the inflation forecast.”

ECONOMIC GROWTH

“GDP is expected to grow by 1.7% in 2022. The deceleration in growth from 2021 to 2022 is primarily a result of the fading rebound from the pandemic, alongside a climbdown from high export prices. GDP growth is forecast to be 1.8% in 2023 and 2.0% in 2024.”

“With lower export prices the economy’s future demand will depend more on investment and household spending.”

“Overall, and after revisions, the risks to the medium-term domestic growth outlook are assessed to be balanced.”

Advertisement

“The output gap is more negative over the forecast period compared to the November meeting. However, as the economy is forecast to grow faster than potential, the output gap closes steadily through to 2024.”

DECISION

“In the near term, headline inflation has increased well above the mid-point of the inflation target band, and returns close to the mid-point in the fourth quarter of 2022.”

“Some risks to the inflation outlook, like food and fuel, have been realised, and other risks, such as currency volatility and capital flow reversals, have become more pronounced.”

“Against this backdrop, the MPC decided to increase the repurchase rate by 25 basis points to 4% per year, with effect from the 28th of January 2022. Four members of the Committee preferred an increase and one member preferred an unchanged stance.”

“Given the expected trajectory for headline inflation and upside risks, the Committee believes a gradual rise in the repo rate will be sufficient to keep inflation expectations well anchored and moderate the future path of interest rates.”

(Reporting by Alexander Winning, Promit Mukherjee and Vuyani Ndaba Editing by James Macharia Chege)

Advertisement