The central bank has kept its benchmark interest rate at an almost 15-year high of 8.25% since May and Kganyago’s remark echoed a line he has repeatedly used to argue that it is premature to loosen policy.

The central bank prefers to anchor inflation expectations at the 4.5% midpoint of its target range. Inflation has been above that level since May 2021 and is only expected to settle there next year.

“The inflation outlook is uncertain, it’s been volatile. Until inflation stabilizes where we want it, at 4.5%, and is sustained there, we don’t see reason why we should change our monetary policy stance,” he said.

Election Pressures

The governor listed food prices, geopolitical risks and their impact on global supply chains and energy markets as some of the upside risks to the inflation outlook. He also said the bank won’t succumb to election pressures, as the country prepares to vote on May 29.

The ruling African National Congress faces the biggest threat to its national majority since coming to power three decades ago, amid rising unemployment and power blackouts that have stalled economic growth.

That’s led to renewed calls for the central bank to expand its mandate to include employment and economic growth.

“They can’t put pressure, they can make noise. Constitutionally, we are supposed to act independently,” said Kganyago. “What is important is that the central bank is shielded from political interference.”

The monetary policy committee will deliver one more rate decision before the elections when it gathers at the end of next month.

Gold Reserves

Finance Minister Enoch Godongwana last week announced a plan to ease the debt pressure on South Africa’s finances by tapping 150 billion rand ($7.8 billion) from profits on the country’s Gold & Foreign Exchange Contingency Reserve Account, held at the central bank.

Asked about the draw down and plans to transfer future profits from the account to Treasury, the governor said it should come with a “permanent framework” that is transparent and shows how reserves can be drawn and how liquidity is neutralized.

Read More: South Africa Taps Gold, Currency Reserves to Rein in Debt 

Inflation Target

On plans to revise the central bank’s inflation target, which has received National Treasury backing, Kganyago said a revision could only be lower than the midpoint of 4.5%, not higher.

Read more: South Africa Treasury Backs Central Bank Inflation Target Review

Treasury said last week work was underway to examine whether adopting a narrower inflation target range or shifting to single point goal made sense.

Kganyago, who was first appointed as governor in 2014, is currently serving his second five-year term, which ends in November.