South Africa’s central bank Governor Tito Mboweni said on Friday there was upward pressure on prices from sources other than food and oil, and that while interest rates were generally too high, low rates cause overspending.
”We are noticing a kind of generalised tendency for prices to rise … so we are seeing generalised price [increases],” he told a breakfast meeting.
Mboweni said there appeared to be a strong upward bias in inflation if one stripped out both food and oil prices and repeated an earlier comment that one could say the country may have entereed an interest rate tightening phase.
The central bank increased its key repo interest rate by 50 basis points to 9,5% on Thursday after a breach of its 3% to 6% CPIX inflation target, and warned inflationary pressures were widening.
Mboweni said the current account should stay in large deficit for the next two or three years, but added he was confident that inflows to finance it would continue. – Reuters