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South Africa’s Kganyago Adamant Central Bank Will Curb Inflation

South Africa’s Kganyago Adamant Central Bank Will Curb Inflation
Lesetja Kganyago, right. Photographer: Dwayne Senior/Bloomberg

South African Reserve Bank Governor Lesetja Kganyago said the central bank won’t hesitate to do what’s needed to preserve price stability. 

“There’s not one doubt that we will bring inflation down. It is a given,” he told an event in New York on Friday to promote South Africa. “The central bank is determined to protect the income of the poor” and when inflation rises, we will tackle it, he said.

The Reserve Bank held interest rates at 8.25% in September while warning the outlook for inflation remains clouded by uncertainty. Kganyago has repeatedly cautioned against prematurely declaring victory in the fight to bring price pressures under control.

Still, the inflation rate has declined from a 2022 peak of 7.8% and stood at 5.4% in September, somewhat above the midpoint of the central bank’s 3% to 6% target range where it prefers to anchor price pressures.

Read More: South Africa Confronting Debt Blowout as Revenue Misses Forecast

Policymakers must balance achieving their goal for price stability against a backdrop of persistently disappointing growth in Africa’s most industrialized nation, where an energy crisis and damaging logistics bottlenecks have held back the economy.

The government forecasts growth of a meager 0.8% this year and 1% in 2024. Power outages that have hobbled output are expected to gradually ease next year, the Treasury said on Wednesday.

The central bank has previously estimated that South African growth would have been closer to 2% over 2023-2025 period had it not been for power cuts, known locally as loadshedding.

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