<\/p>\n
South African Reserve Bank Governor Lesetja Kganyago said inflation expectations have risen above the central bank\u2019s 3% target, justifying the May interest-rate increase and signalling further tightening may be needed when policymakers meet later this month.<\/p>\n
The central bank raised rates in May for the first time in three years, lifting them by 25 basis points to 7% to prevent an oil shock caused by the Iran war from spilling into lasting inflation.<\/p>\n
\u201cThe inflation expectations have risen, they are above our target and that is the concern, and that is what we should actually be responding to,\u201d Kganyago said in an interview with Francine Lacqua on Bloomberg Television on Wednesday.<\/p>\n
Read: Inflation expectations rise before South Africa rate decision<\/p>\n
He emphasised that bringing expectations back to target was the priority, after a recent reading of more than 4%, which showed the central bank\u2019s decision to raise rates in May \u201cwas a correct one.\u201d He declined to comment on what policymakers might decide at their next meeting.<\/p>\n
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\u201cWhat the call will be in July we will see when we get there,\u201d he said. The monetary policy committee will announce its next rate decision on July 23. Bets in interest-rate futures markets show investors expect them to hike again.<\/p>\n
South African inflation quickened to 4.5% in May amid surging energy prices and Kganyago warned last week that the central bank would take steps to keep inflation expectations anchored.<\/p>\n
Read:
Real take-home pay at a two-year low
Inflation expectations are rising, Sarb\u2019s Kganyago warns<\/p>\n
The governor warned against waiting too long to act, saying \u201cif you are late to the game it is a different ballgame\u201d and would require more aggressive tightening. Core inflation, which strips out energy and food prices, is expected to peak in the first quarter of next year, he said.<\/p>\n
The central bank is navigating an uncertain environment complicated by geopolitical volatility and the inflationary effects of artificial intelligence in the short term.<\/p>\n
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On recent anti-migration protests in South Africa, Kganyago said the authorities acted decisively to maintain order while respecting constitutional rights to peaceful demonstration. He said he hasn\u2019t encountered investor concerns about political stability, noting \u201cyou saw decisive action coming from the South African authorities, and in the main the protests were peaceful.\u201d<\/p>\n
Read:
Heavy police presence keeps a lid on anti-immigrant violence
Freight industry weighs Transnet\u2019s latest port reforms<\/p>\n
This story was produced with the assistance of Bloomberg Automation.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n
#Kganyago #signals #hike #rates #month<\/p>\n","protected":false},"excerpt":{"rendered":"
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