'It is incumbent for SAReserveBank to increase borrowing costs to tame sticky inflation, even if its actions gave rise to financial distress,' - Governor KganyagoLesetja. Moneyweb InterestRate SARB
It is incumbent on South Africa’s central bank to increase borrowing costs to tame sticky inflation, even if its actions gave rise to financial distress, Governor Lesetja Kganyago said. Complaints about surging living costs predated those about higher interest rates and the South African Reserve Bank first and foremost had to protect the local buying power of the rand, Kganyago said in an interview broadcast by Johannesburg-based broadcaster eNCA on Wednesday.
Inflation slowed more than projected to a 13 month-low of 6.3% in May, easing pressure on the bank to continue raising borrowing costs. “When inflation rises or stays elevated, it is appropriate that monetary policy adjusts and that adjustments take place through interest rates in order to bring inflation down,” Kganyago said. He conceded that the South African economy, battered by rolling power cuts and logistics constraints, was in trouble, although “crisis is not the word I would use.
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