South Africa will monitor the effects of higher oil and food prices on inflation to determine when policy adjustments need to be made, said Reserve Bank Deputy Governor Daniel Mminele.
In a speech posted on the bank’s website on Tuesday, Mminele reiterated that while inflationary pressures have increased, inflation is expected to remain in the bank’s 3% to 6% target band until the end of 2012.
“Inflationary pressures will be monitored, especially insofar as second round inflationary pressures may negatively impact the inflation outlook, so as determine when policy adjustments may be required,” he said in a speech given in Washington on April 16.
The central bank left its repo rate unchanged at 5,5% at its last meeting in March, after reducing it by 650 basis points between December 2008 and December 2010.
Some analysts expect the central bank to start increasing rates toward the end of the year.
Mminele said the economic recovery was on track and could improve, but there was still not enough growth to meaningfully address unemployment.
The bank’s next policy decision is on May 12. — Reuters