South African Reserve Bank Governor Lesetja Kganyago said he and his fellow monetary policymakers will stick to their job of ensuring price stability, regardless of the political uncertainty caused by last week’s election.
The African National Congress lost its parliamentary majority in the May 29 election for the first time since it took power in 1994, and is now talking with its smaller rivals about a power-sharing pact. The central bank held its benchmark interest rate steady last week at a 15-year high of 8.25%, warning that while price pressures have moderated in recent months, they are still too high. The decision had been widely anticipated, with economists expecting the central bank to keep a low profile, when it delivered its verdict one day after South Africans voted.
Nodding to the recent improvement, officials adjusted their May 30 policy statement to say inflation risks are now broadly balanced, a shift from March when they saw risks skewed to the upside. They also tweaked their forecast to project price pressures stabilizing at 4.5% in the second quarter of next year, versus end-2025 in March.