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The Reserve Bank will wait for broader price increases in the economy before tightening policy, even as risks that the Monetary Policy Committee had previously warned about come true, Governor Lesetja Kganyago said. "The approach of the Reserve Bank is to see through the shocks and see whether there is any evidence of second-round effects emerging, and if that begins to emerge you have got to respond," Kganyago said Thursday in an interview at his office in the capital, Pretoria. "You can’t respond to noise." Inflation quickened to a 10-month high of 5.1% in July, driven by fuel prices, which increased on more expensive oil and a weaker rand. The Bank prefers price-growth expectations, and inflation, close to the 4.5% midpoint of its target band and it will continue to be forward-looking when setting rates, Kganyago said.

The Reserve Bank is caught between accelerating inflation and a stubbornly weak economy with unemployment at more than 27%. Raising interest rates to limit p...

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