South African Reserve Bank (SARB) Governor Tito Mboweni said on Friday evening that while CPIX inflation is expected to hit the upper end of the 3% to 6% target band by the first quarter of next year, it should peak around April and then begin to come down.
“We should only begin to see a breaching of the upper end in April,” he said.
“However, these are just econometric tools,” he emphasised, saying they are not definitive measures.
He added that although inflationary pressures remain, some people argue that had the SARB acted much earlier in adjusting the monetary policy stance, it might not have been in the current position of a higher inflation scenario.
“We are very pleased to have stayed within the target — [we] should breach the upper end next year and come back. But [it could be said] had we acted earlier, maybe we would be in a position to have avoided that eventuality,” he commented.
He said, in a lighter vein, that his major New Year’s wishes are that the South African economy continue to stay within the inflation target, that the country continue to accumulate foreign exchange reserves, that the fiscal objectives be met by having a surplus and “in whichever game we participate we should beat the Australians”.
Mboweni said the economy has been growing at robust levels and the Treasury has accumulated sufficient tax revenues to increase social spending. He added that it was notable in the past year that foreigners had given the country the thumbs-up via their purchasing activities.
“We’ve had a very interesting year, with one of the most distinctive features being non-resident investors pouring in around a net R1,04-billion in equities and bonds year to date — a very good indicator of the kind of confidence non-residents have in the growth story going on here.
“[The] SARB has also been in a position to accumulate international reserves. Gross gold and foreign reserves are around $24-billion from around minus $25-billion in 1998, which means cumulatively since 1998 we have actually purchased over $50-billion in the market,” he said.
“We have managed to do this by purchasing foreign currency whenever opportunities arose without interfering with the equilibrium of the exchange rate on a daily basis,” he emphasised. “We were actually having a serious structural crisis in 1998 and this has now been somewhat resolved.
“Another reason the year has been remarkable is that despite threats brought about by stubbornly high oil prices, we have been in the fortunate position to have the CPIX rate within target.”
Mboweni concluded by saying that he is hoping to take a break from December 18. — I-Net Bridge