RESERVE BANK OUTLOOK
Reserve Bank warns downgrades will ‘add to inflation uncertainty’
Growth prospects remain subdued and inflation is expected to remain relatively high, Monetary Policy Review shows
The Reserve Bank says it expects inflation to return to the upper part of the target band (3%-6%) over the next three years, but warns that the cabinet reshuffle and credit-rating downgrades by Fitch and S&P Global Ratings have made the outlook "unusually uncertain". According to the Monetary Policy Review (MPR) released on Monday, SA’s macroeconomic imbalances have begun to ease. The Bank expects inflation to fall back into the inflation band, averaging 5.4% in 2018 and 5.5% in 2019, while GDP is expected to pick up again after the slump in 2016. However, growth prospects were still subdued and inflation was expected to remain relatively high at the top end of the target band. "The outlook is quite favourable compared to a year ago," said the Bank. "There are risks to this forecast which, on balance, incline towards higher inflation."
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