{The South African Reserve Bank will \u201cact with resolve\u201d if price pressures stemming from a weaker rand spread more broadly in the economy, Reserve Bank Governor Lesetja Kganyago said.}<\/p>\n
If \u201cthere is a de-anchoring of inflation expectations, to maintain the integrity of the inflation targeting framework, we will have to adjust the monetary policy stance,\u201d Kganyago said in an interview with Bloomberg TV at the World Economic Forum in Davos on Wednesday.<\/p>\n
After falling 25% against the dollar in 2015, the rand weakened a further 8.3% since the start of this year, the worst performer of 16 major currencies tracked by Bloomberg. That\u2019s adding to pressure on inflation, which accelerated to 5.2% in December as the worst drought in more than a century pushed up food prices.<\/p>\n
Economists are split on whether policy makers will stick to raising the benchmark rate in moves of 25 basis points at a time, or take more aggressive action. Seven of the 12 economists in a Bloomberg survey said the Reserve Bank will increase the repurchase rate by 50 basis points on January 28, with one analyst predicting it will stay unchanged at 6.25% and the rest expecting a quarter-point increase.<\/p>\n
\u201cThe tightening steps that we have taken have been very measured unlike the previous cycle that we have seen,\u201d Kganyago said. \u201cGiven where the policy rates are, a 25 basis point hike is not a small hike necessarily.\u201d<\/p>\n
The rand weakened after Kganyago\u2019s interview as some market analysts interpreted his comments to suggest the bank won\u2019t raise interest rates by more than a quarter percentage point. The currency fell 0.4% to R16.8468\/$ as of 18:50 in Johannesburg.<\/p>\n
\u201cPeople are taking this as pretty dovish,\u201d Peter Attard Montalto, an economist at Nomura in London, said in an email. \u201cI don\u2019t think so necessarily. Everything else he has just said is unchanged and shows concern on expectations and currency impact.\u201d<\/p>\n
The rand fell as much as 9.9% against the dollar to a record low of R17.9169 in early-morning trading in Asia on January 11 during low liquidity. The so-called flash crash of the currency \u201cis something that we are concerned about,\u201d Kganyago said.<\/p>\n
\u201cThere is nothing that a central bank can do to stop a currency to adjust to where fundamentals should be,\u201d he said. \u201cExchange rates do overshoot and to the extent that this one has overshot, it will come back and adjust to the fundamentals.\u201d<\/p>\n
Weakening growth in South Africa is heightening the policy challenge for Kganyago. The International Monetary Fund on Tuesday cut its 2016 economic growth forecast for South Africa by almost half to 0.7% amid a slump in commodity prices and a slowdown in the nation\u2019s biggest export market, China. Barclays Africa Group this week cut its GDP growth forecast for South Africa to 0.9% from 1.4%.<\/p>\n
\u201cSouth Africa is facing a policy dilemma, you are having slower growth and you are having rising inflation,\u201d Kganyago said.<\/p>\n
Finance Minister Pravin Gordhan, speaking on a panel at the World Economic Forum in Davos, said the IMF\u2019s forecasts show \u201cdismal\u201d growth for the South African economy. The government\u2019s revised growth estimates, due to be published in the budget next month, are more optimistic than the IMF, he said.<\/p>\n
Source:News 24:Kganyago: [We will act with resolve on inflation->http:\/\/www.fin24.com\/Economy\/kganyago-we-will-act-with-resolve-on-inflation-20160121]<\/p>\n","protected":false},"excerpt":{"rendered":"
{The South African Reserve Bank will \u201cact with resolve\u201d if price pressures stemming from a weaker rand spread more broadly in the economy, Reserve Bank Governor Lesetja Kganyago said.} If \u201cthere is a de-anchoring of inflation expectations, to maintain the integrity of the inflation targeting framework, we will have to adjust the monetary policy stance,\u201d […]<\/p>\n","protected":false},"author":3,"featured_media":2000071641,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[100],"byline":[2462],"hashtag":[],"class_list":["post-22668","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-africa","byline-news-24"],"bylines":[{"id":2462,"name":"News 24","slug":"news-24","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":null}],"contributors":[{"id":2462,"name":"News 24","slug":"news-24","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":null}],"featured_image":{"id":2000071641,"url":"https:\/\/en-images.igihe.com\/IMG\/logo\/arton22668.jpg","alt":"","caption":"","mime_type":"image\/jpeg","width":0,"height":0,"sizes":{"thumbnail":{"url":"https:\/\/en-images.igihe.com\/IMG\/logo\/arton22668.jpg","width":1,"height":1},"medium":{"url":"https:\/\/en-images.igihe.com\/IMG\/logo\/arton22668.jpg","width":1,"height":1},"medium_large":{"url":"https:\/\/en-images.igihe.com\/IMG\/logo\/arton22668.jpg","width":1,"height":1},"large":{"url":"https:\/\/en-images.igihe.com\/IMG\/logo\/arton22668.jpg","width":1,"height":1},"full":{"url":"https:\/\/en-images.igihe.com\/IMG\/logo\/arton22668.jpg","width":0,"height":0}}},"_links":{"self":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/22668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/comments?post=22668"}],"version-history":[{"count":0,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/22668\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/media\/2000071641"}],"wp:attachment":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/media?parent=22668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/categories?post=22668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/tags?post=22668"},{"taxonomy":"byline","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/byline?post=22668"},{"taxonomy":"hashtag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/hashtag?post=22668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}