EXCERPTS-South African central bank comments as rates kept on hold

Reuters
·2 min read

JOHANNESBURG, Sept 23 (Reuters) - Below are some quotes from South African Reserve Bank Governor Lesetja Kganyago on Thursday as he announced the central bank's decision to keep its benchmark repo rate at 3.5%.

INFLATION

"Headline consumer price inflation for 2021 is revised slightly higher to 4.4% (up from 4.3%), and remains unchanged at 4.2% in 2022 and 4.5% in 2023."

"The forecast for core inflation is revised higher to 3.0% in 2021 (up from 2.9%) and to 3.8% in 2022 (up from 3.7%). Core inflation is expected to be 4.3% in 2023, unchanged from the July forecast."

"The Bank's forecast reflects higher headline inflation for the rest of this year, before moderating in 2022."

"The risks to the short-term inflation outlook are assessed to the upside."

ECONOMIC GROWTH

"We expect the economy to grow by an upwardly revised 5.3% this year (from 4.2%), despite the much larger negative effect on output than was previously estimated from the July unrest. Our revised estimate for third quarter economic growth is -1.2%, compared to the previous -0.5%."

"The July events and the pandemic are likely to have lasting effects on investor confidence and job creation, impeding recovery in labour-intensive sectors hardest hit by the lockdowns. GDP is expected to grow by 1.7% in 2022, (down from 2.3%) and by 1.8% in 2023 (down from 2.4%)."

"Overall, and after revisions, the risks to the medium-term domestic growth outlook are assessed to be balanced, as most of the bounceback from the recovery is now in the past."

DECISION

"With largely unchanged inflation expectations and even with continued upside risks, the Committee expects inflation to stay close to the mid-point over the forecast period."

"Against this backdrop, the MPC decided to keep rates unchanged at 3.5% per annum. The decision was unanimous."

"The implied policy rate path of the Quarterly Projection Model (QPM) indicates an increase of 25 basis points in the fourth quarter of 2021 and further increases in each quarter of 2022 and 2023." (Reporting by Olivia Kumwenda-Mtambo, Alexander Winning and Promit Mukherjee; Editing by Emelia Sithole-Matarise)