South Africa’s economy faces major challenges and government needs to win back the confidence of businesses and investors by tackling policy uncertainty and corruption, central bank governor Lesetja Kganyago said on Thursday.
Kganyago said in a speech at an investor conference in New York that weak business confidence had shaved an estimated one percentage point off South Africa’s economic growth last year.
He said that the central bank would like to see inflation expectations anchored at around 4.5 percent, compared with 5.1 percent now. The volatile rand currency is the biggest risk to inflation forecasts, Kganyago said.
“Inflation today in South Africa is within the target. The highest it should be in terms of our forecast is 5.2 percent,” he said in a subsequent interview with Reuters.
“That gives us room within the inflation target band…Inflation could rise but would remain within our inflation target,” Kganyago said.
The Governor of the South African Reserve Bank deflected questions on where he thought interest rates would move, saying there is no target.
The central bank kept its benchmark repo rate at 6.75 percent on Sept. 21, defying expectations at the time of a cut based upon easing inflation pressures and a sluggish recovery from a recession in the first half of the year. Read the full story here.