Reserve Bank Governor Lysitja Kganyago. Photo: Gallo Images/Business Day/Freddy Mavunda
Analysts are less certain than they were a month ago that South Africa’s central bank will pause the sharpest phase of monetary tightening since 2006.
Of the 16 respondents in a Bloomberg poll conducted July 7-12, half expect the central bank’s monetary policy committee to raise the benchmark interest rate by a quarter of a percentage point to 8.50% and the rest expect to hold it at the close of the policy meeting on July 20. . This compared to nearly two-thirds who expected the pause last month.
The Monetary Policy Committee has raised the key rate by 475 basis points since it began tightening in November 2021 in an effort to rein in inflation that has averaged above 4.5% of its target range, as it would prefer to hold price growth expectations steady, for more than two years.
Governor Lysitja Kganyago and Deputy Governor Koben Naidoo said last week that once the MPC is confident that inflation will return to the midpoint of its target range, it will halt rate hikes.
South Africa’s consumer price index rose to an annualized rate of 6.3% in May, from 6.8% in the previous month. Kganyago said he expects the metric to return to the MPC’s target range of 3% to 6% in June — that data will be released next week.
This is in contrast Average inflation expectations For the year it stands at 6.5%, data from a Bureau of Economic Research survey last week showed.
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