Members of the Reserve Bank's monetary policy committee this week took a big bet that inflation can be tamed by year-end when they voted unanimously to keep interest rates flat. And it is a big bet. Consumer price inflation averaged 6.4% last year - its highest since the financial crisis of 2008-09. Reserve Bank governor Lesetja Kganyago's big hope that the effects of price rises will be ameliorated by year-end is a bet on a combination of factors, all of them out of his control. It's a bet on the weather, which in turn is a bet on food inflation, now running at 12%. Summer rainfall has been positive for planting, but further downpours are needed for a decent maize crop, and the Western Cape needs serious soaking to improve wheat production. It's also a bet that US interest rates will not rise as much or as quickly as suggested by Federal Reserve chairwoman Janet Yellen, and it's a bet that South Africa will not be subjected to another Nene-esque political shock that will drive its ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.