Rate cuts not imminent, says Kganyago

THE FORECAST of inflation moderation by the Reserve Bank and the end of the interest rate hiking cycling did not mean rate cuts were imminent, Reserve Bank governor Lesetja Kganyago said yesterday. The Reserve Bank’s inflation outlook is an average of 6.4 percent this year, 5.8 percent next year and 5.5 percent in 2018. The central bank’s target range is 3 to 6 percent. Inflation breached this target range last month when it quickened to 6.1 percent from 5.9 percent the previous month. Addressing the annual convention of the SA Chamber of Business and Industry, Kganyago said the moderating inflation trajectory reflected recent policy tightening by the Reserve Bank, an expected deceleration of food price growth, and an improvement in exchange control outlook relative to previous forecasts. “The MPC (monetary policy committee) is of the view that should the forecasts materialise, the hiking cycle may be nearing its end. However, this does not mean interest rate reductions are imminent, as we would like to see inflation more firmly within the target range on a sustainable basis over the forecast horizon. We are also clear that the bar for any future cuts has been set very high.” – Wiseman Khuzwayo