<\/p>\n
South Africa\u2019s central bank Governor Lesetja Kganyago says policymakers will \u201cvery carefully\u201d monitor incoming data to guide their next rate decision, as the Iran war clouds the inflation outlook and injects fresh uncertainty into the global economy.<\/p>\n
\u201cAs ever, we are not going to pre-commit to a path and give up optionality. We cannot offer certainty about our next steps,\u201d Kganyago told an audience on Monday at Rhodes University in the Eastern Cape.<\/p>\n
\u201cInstead, we want to maximise certainty about where inflation is going \u2013 specifically, that it is going back [to the 3% target],\u201d he said.<\/p>\n
Read:<\/p>\n
Sarb to act if war inflation shock persists
\nInflation edges up before Iran oil shock registers
\nKganyago says war inflation risks are playing out<\/p>\n
Kganyago and his fellow Monetary Policy Committee members left the policy rate at 6.75% at their previous meeting in March to weigh the fallout of the war in Iran.<\/p>\n
Hostilities in the Middle East have sent oil prices surging and effectively closed the Strait of Hormuz, a key artery for about a fifth of global oil and liquefied natural gas flows.<\/p>\n
Since the war began on 28 February, Brent crude has jumped almost 60%, lifting local diesel prices to a record.<\/p>\n
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Kganyago acknowledged that while the shock from the Iran war hit as the economy transitioned to a lower inflation target of 3%, policymakers remain committed to steering it back to that level.<\/p>\n
\u201cThat is really our most important message: although we cannot do much about higher inflation right now, we are very committed to getting inflation back to 3%, just where we had it before the shock hit,\u201d he said.<\/p>\n
\u201cIt seemed we were going to complete the disinflation soon, perhaps this year. Now this process will take longer.\u201d<\/p>\n
Inflation edged up to 3.1% in March and is expected to spike in coming months due to higher energy and food prices. \u201cWe are experiencing the biggest jump in fuel price inflation in the history of inflation targeting,\u201d Kganyago said.<\/p>\n
A bigger problem is food prices, he added.<\/p>\n
\u201cThe Middle East conflict has large implications for fertilisers and diesel, both critical components of food supply chains.\u201d<\/p>\n
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Government cuts fuel levy by R3 to curb price shock
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Persistently higher food inflation, alongside the fuel shock, would pose serious risks to price growth expectations, he said.<\/p>\n
\u201cIn these conditions, we will be studying the data very carefully, both to assess how these variables are playing out and to see if there is early evidence of underlying inflation starting to move,\u201d the governor said.<\/p>\n
The bank\u2019s quarterly projection model shows inflation peaking at 4.3% for April, while it sees fuel price growth accelerating to 18.3% during the second quarter of this year.<\/p>\n
Kganyago also implied that monitoring other central banks will be crucial, noting \u201cit is hard to sit out a global tightening cycle\u201d.<\/p>\n
\u00a9\u00a02026\u00a0Bloomberg<\/p>\n
#Kganyago #wary #CPI #guarded #rate #outlook<\/p>\n","protected":false},"excerpt":{"rendered":"
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