South African central bank governor’s comments on rate decision

PRETORIA (Reuters) – Below are some quotes from South African Reserve Bank Governor Lesetja Kganyago on Thursday as he announced the central bank’s decision to raise its main lending rate by 50 basis points to 8.25%.


“Local food price inflation is revised up again, in part due to the lagged impact of the weaker exchange rate and despite global food prices falling in dollar terms. Food price inflation is now expected to be 10.8% in 2023 (up from 9.9%) and 5.0% in 2024 (up from 4.5%).”

“Our forecast for core inflation is revised up to 5.3% in 2023 (previously 5.1%), 5.0% (from 4.8%) and 4.6% (from 4.5%) in 2024 and 2025, respectively.”

“With core goods and food higher in the near term, headline inflation for 2023 is revised up to 6.2% (from 6.0%). Headline inflation for 2024 also increases to 5.1%, before moderating to 4.5% in 2025 on the back of easing food and fuel inflation.”

“Risks to the inflation outlook are assessed to the upside.”

“Electricity prices and other administered prices continue to present clear short and medium-term risks. Domestic food price inflation continues to be elevated, and the risk of drier weather conditions in coming months has increased.”

“Load-shedding may additionally have broader price effects on the cost of doing business and the cost of living, in particular as diesel consumption increases.”


“For 2023, the Bank’s forecast for GDP growth is slightly higher than in March, at 0.3%.”

“Energy and logistical constraints remain binding on South Africa’s growth outlook, limiting economic activity and increase costs. We estimate loadshedding alone to deduct 2 percentage points from growth this year.”

“Our GDP growth forecast for 2024 and 2025 is unchanged from the previous meeting, at 1.0% and 1.1%, respectively.”

“Economic growth has been volatile for some time and prospects for growth remain uncertain. An improvement in logistics and a sustained reduction in load-shedding, or increased energy supply from alternative sources, would significantly raise growth.”

“At present, we assess the risks to the medium-term domestic growth outlook to be balanced.”


“Headline inflation is forecast to remain above the upper end of the inflation target range until the third quarter of this year, and will only sustainably revert to the mid-point of the target range by the second quarter of 2025.”

“The forecast takes into account the policy rate trajectory indicated by the Bank’s Quarterly Projection Model (QPM).”

“Against this backdrop, the MPC decided to increase the repurchase rate by 50 basis points to 8.25% per year, with effect from the 26th of May 2023. The decision was unanimous.”

(Compiled by Olivia Kumwenda-Mtambo; Editing by James Macharia Chege)