July 18 (Reuters) – Below are some quotes from South African Reserve Bank Governor Lesetja Kganyago at a news conference to announce the central bank’s latest interest rate decision.
DECISION
“The MPC (Monetary Policy Committee) decided to keep the repo rate unchanged at 8.25%. Four members preferred an unchanged stance, and two preferred a reduction of 25 basis points.”
“In discussing the stance, MPC members agreed that restrictive policy remains appropriate to stabilise inflation at 4.5%.”
“The committee assessed that an unchanged stance remained appropriate, given the inflation risks. Some members, however, were of the view that the inflation outlook had improved enough to reduce the degree of restrictiveness.”
INFLATION
“The most recent headline print, for May, was 5.2%, unchanged from April and still in the top half of our target range.”
“The outlook, however, has improved somewhat. Headline consumer price inflation for this year is now projected at 4.9%, compared to 5.1% at the previous meeting.”
“Over the next few quarters, headline is expected to dip below the 4.5% midpoint, mainly because of fuel and food prices. This outlook is supported by the stronger rand.”
“Over the medium term, we continue to see inflation stabilising at 4.5%, with core inflation remaining close to this midpoint objective throughout.”
ECONOMIC GROWTH
“The economy contracted slightly in the first quarter, by 0.1%, and recent data, including last week’s mining and manufacturing numbers, have caused us to trim our second quarter growth estimate modestly, to 0.6%.”
“Over the medium term, we expect somewhat faster growth, supported by a more reliable electricity supply and improving logistics, among other factors.”
“Our revised growth projections nonetheless remain below longer-run historical averages, of about 2%. The risks to this forecast are assessed as broadly balanced, with ample scope for structural reforms to lift growth further over the medium term.”
OTHER COMMENTS
“Inflation expectations do not yet reflect the 4.5% midpoint objective over the medium term. While expectations are moving in the right direction, they continue to show the impact of the recent inflation surge.”
“We remain concerned about administered prices. We have had to mark up electricity inflation for this forecast round, even as other categories shifted lower.”
“The forecast continues to see rates easing into more neutral territory by next year.”
“We are committed to stabilising inflation at the mid-point of the target band. Achieving this outcome will improve the economic outlook and reduce borrowing costs.”
(Compiled by Alexander Winning)
