South Africans should not expect a drop in interest rates for the remainder of the year, Reserve Bank governor Tito Mboweni said on Tuesday.
”It seems unlikely that monetary policy will be relaxed in the foreseeable future,” he said in a prepared address to the bank’s ordinary general meeting of shareholders.
”Although the current stance of monetary policy may be perceived as negative for short-term growth and employment creation, such a view must be compared with the alternative of even higher future
interest rate levels if inflation is not brought under control,” he said.
Mboweni would not be drawn on whether the inflation target of between three and six percent for 2002 could still be achieved.
The 2003 target, also between three and six percent, was still reachable.
”Given this tightened stance of monetary policy and barring any unforeseen negative shocks, the inflation target for 2003 could be met,” the governor said.
”However, the average annual rate of increase in the CPIX (the consumer price index excluding mortgage rates) will probably be close to the upper end of the target range and risks to the forecast are on the upside.” – Sapa