Davos 2023: Sarb Governor Kganyago on SA’s inflation outlook
South African Reserve Bank Governor Lesetja Kganyago says the quickening pace in local monetary policy was impacted by a series of supply shocks which greatly fed into domestic price pressures. He also flagged that it appears as if headline inflation is on the decline after moderating from 6.5 per cent to 5.8 per cent in the third quarter, indicating that the restrictive stance may be alleviating price pressures in this regard. CNBC Africa's Fifi Peters caught up with him on the sidelines of Day 2 of this year's Davos meetings and this is what he had to say.
Tue, 17 Jan 2023 15:59:06 GMT
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AI Generated Summary
- Supply shocks impact local monetary policy and lead to rising domestic price pressures.
- Central banks play a vital role in managing inflation and curbing inflation expectations.
- Structural unemployment issues and education gaps hinder economic growth and require policy interventions to address.
South African Reserve Bank Governor Lesetja Kganyago shared insights on the country's inflation outlook at the Davos 2023 meetings. In a conversation with CNBC Africa's Fifi Peters, he delved into the impact of supply shocks on local monetary policy and the subsequent rise in domestic price pressures. Kganyago noted a slight decline in headline inflation from 6.5% to 5.8% in the third quarter, indicating a potential easing of price pressures due to the restrictive stance taken. He highlighted concerns around the rising cost of living and the global recession fears that are plaguing many economies. The governor emphasized the importance of central banks in managing inflation and the need for vigilance in policy decisions to curb inflation expectations. Kganyago also addressed criticisms of the bank's interest rate adjustments, pointing out that prudent monetary policies have been instrumental in containing inflation despite economic challenges. He underscored the structural nature of South Africa's unemployment issues and the role of education in bridging the skills gap for economic growth. The governor defended central banks' actions against inducing a recession, stating that inflation management is crucial to sustainable economic balance. Amidst debates on aggressive central bank actions, Kganyago emphasized the delicate balance between addressing inflation and avoiding over-tightening measures that could potentially trigger a recession.
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