South Africa's central bank governor Kganyago sees upside risks to inflation
TLT•Governor Lesetja Kganyago said rising global energy and food costs pose upside risks to South African inflation, which is expected to average 4.4% this year and return to the 3% target in 2028. The central bank raised its rate by 25 basis points to 7.25% last month.
1. Inflation outlook
Kganyago said South African inflation is expected to average 4.4% this year, ease within the central bank's tolerance band in 2027 and return to its 3% target in 2028. He cited geopolitical uncertainty affecting oil and fertiliser prices, risks to food supplies and the possibility of El Niño.
2. Policy and price pressures
The central bank raised its rate by 25 basis points to 7.25% last month after pausing in July. Kganyago described the current rate as "moderately restrictive" and said future decisions would be made "meeting by meeting"; the next policy decision is due in November.
3. Underlying inflation
Kganyago said measures of underlying inflation point to an upturn. Headline inflation rose slightly to 4.4% annually in August, driven mainly by housing and utilities, transport, and insurance and financial services. He said a steady exchange rate had offset some pressures but was no reason for complacency.
