PRETORIA, Sept 21 - South Africa's central bank kept its main interest rate unchanged on Thursday despite inflation being firmly within its target, stressing that deteriorating public finances risked fuelling price pressures.
South African Reserve Bank Governor Lesetja Kganyago told a news conference that fiscal management was pushing up the country's risk premium as bond yields had risen despite inflation coming down. Economists had widely predicted that the repo rate would be maintained at 8.25% , but many were struck by Kganyago's hawkishness including on government finances.
Inflation edged up to 4.8% year-on-year in August from 4.7% in July, data showed on Wednesday, remaining well within the central bank's target range of between 3%-6%."If you want to know when interest rates will come down, look at whether inflation declines to target and stays there on a sustainable basis," he said.
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