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Kganyago Says SARB "Means Business" Re: Price Stability, Recession Is Not Baseline Scenario


SARB Governor Lesetja Kganyago now holds a Q&A session after delivering his statement on monetary policy decision:

  • MPC deliberations: Kganyago says that the MPC discussed both 25bp and 50bp hikes but voted for a smaller increase. The way he describes the central bank's approach is rather hawkish though, he stresses that the SARB "means business" when it comes to price stability.
  • Load-shedding: The Governor notes that the length and extend have increased since the release of November forecasts. He notes that load-shedding not only reduces growth, but also has price effects, as households and businesses must try and find alternative sources of energy, which can translate into inflationary pressures. The central bank could not quantify the possible impact on inflation and only has the estimate of impact on GDP growth.
  • Economy: Kganyago notes that recessionary risks have increased globally. Recession is not the SARB's base-case scenario for South Africa, but there is much uncertainty around these expectations.
  • Inflation expectations: Kganyago says that inflation expectations among price-setters have increased, which calls for a reaction from the central bank.

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