South African Reserve Bank Deputy Governor Fundi Tshazibana said there are too many risks to the inflation outlook to declare that the cycle of interest-rate increases is over.
The central bank’s monetary policy committee has raised interest rates by 475 basis points to 8.25% in its current tightening cycle that started in November 2021 and paused at its last two meetings.
“While many in the public domain are trying to get us to say the hiking cycle is over, as I said, there are too many risks on the horizon for us to pronounce on it,” she said at an event at the Gordon Institute of Business Science in Johannesburg on Tuesday. “We have seen recent price pressures mainly in fuel but also on the food side.”
Annual inflation has remained above the midpoint of the Reserve Bank’s target range of 3% to 6% — where it prefers to anchor expectations — since May 2021. It accelerated to 5.4% in September because of higher energy and food prices.
Tshazibana added that the policy stance “is probably adequate to stabilize inflation at 4.5%.”
In its six-monthly monetary policy review published last week, the bank reiterated that while the rate of price growth has returned to within its target range, it had still not stabilized around the 4.5% midpoint in a convincingly sustainable manner.
The MPC will announce its next rate decision at its final meeting of the year scheduled for Nov. 21-23.