Reserve Bank warns inflation could breach target
Consumers could face an interest-rate increase before year-end
In a sign that consumers could face an interest-rate increase before the year is out, Reserve Bank deputy governor Daniel Mminele has warned that inflation could overshoot the 6% upper limit of its target band. "Given the volatile environment, the risk of an overshoot of the target, given the balance of risks, should not be under-estimated," he said in New York on Tuesday, in a speech posted on the Bank’s website. The Bank, which kept rates unchanged in September after a vote by the monetary policy committee, will next decide on policy on November 22. Some economists say it may start a rate-hiking cycle, after a weaker rand, higher oil prices and turmoil in emerging markets worsened the outlook on inflation.
The Bank expects headline inflation to peak at 5.9% in the second quarter of 2019 and settle at 5.4% towards the end of 2020, according to its latest estimates released in September. While this is within the 3%-6% target range, the Bank has made it clear in the past that i...
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