Good news from Lesetja Kganyago

South African Reserve Bank Governor Lesetja Kganyago said that the balance of risks vis-a-vis inflation is stable after policymakers cut interest rates for the first time in four years last month.

“As far as inflation is concerned, the balance of risks is stable,” he said Friday in a speech at the International Monetary Fund in Washington.

Kganyago said that South Africa’s consumer price rises had peaked earlier and at lower levels than in advanced economies, and that positive shocks — lower oil prices, unsnarled global supply chains — were now proving supportive to monetary policy.

The central bank cut interest rates by 25 basis points last month to 8%, matching the median estimate of 24 economists in a Bloomberg survey.

The monetary policy committee also considered lowering the rate by 50 basis points and leaving it unchanged.

South Africa’s annual inflation slowed to 3.8% in September and is forecast by policymakers to remain below 4% over the next three quarters. The central bank aims to anchor inflation expectations around the midpoint of its 3% to 6% target range.

Policymakers deliver their final rate decision of 2024 on Nov. 21 and economists expect them to make another quarter-point cut.

Kganyago said Oct. 10 that the central bank expects the next two or three inflation reports to come in below 4% and “that provides policy space for us.”

South Africa’s inflation outlook is also benefiting from a stronger rand that’s helping to damp import prices, following the formation of a governing coalition after elections in May that included centrist parties, boosting business confidence.