Governor Kganyago Says That Real Policy Rate Remains Somewhat Accommodative

SARB Governor Lesetja Kganyago said at the University of Johannesburg that South Africa's real policy rate remains "somewhat accommodative" despite the cumulative 425bp worth of rate hikes delivered over the past 18 months, according to the text of his speech published on the central bank's website.

• "Since November 2021 to date, we have raised the repo rate by a cumulative 425 basis points. However, for context, the cumulative repo rate increases by the SARB have been below those implemented by some of our emerging market peers and, more importantly, the real repo rate is still below its estimated neutral level of 2.5%."
• "It is expected that our own domestic infrastructural bottlenecks will continue to exert upside pressure on the inflation outlook."
• "Another important factor that has impacted inflation in South African has been exchange rate weakness. The rand has been one of the worst-performing emerging market currencies this year and over the past 12 months."
• "As we have reiterated before, we are constantly monitoring price developments and stand ready to act as necessary to fulfil our mandate. As an independent central bank operating a flexible inflation-targeting framework, the SARB’s primary goal is to guide inflation and inflation expectations closer to the midpoint of the target band."