Johannesburg - Below are comments from new South African Reserve Bank Governor Lesetja Kganyago, made during his announcement on the Bank's decision on interest rates.
INFLATION
“The downward trend is expected to continue into next year, with inflation forecast to reach a low of 5.1 per cent in the second quarter, and to average 5.3 per cent for the year, compared with 5.7 per cent previously.
“The MPC assesses the risk to the headline inflation forecast to be broadly balanced.
“A further upside risk to the inflation forecast comes from a possible increase in wage settlement rates in excess of inflation and productivity growth in the coming year.
ECONOMIC GROWTH
“The domestic growth outlook remains challenging, but after two quarters dominated by the fall-out from extended strikes, some recovery is expected, but demand remains subdued.
“The coming quarters are expected to see an improved performance in the mining and manufacturing sectors, but the outlook is inhibited by domestic structural constraints, as well as by a weak global economy and the continued declining trend in non-oil commodity prices.
“Growth next year is expected to remain weak.
RAND
“The rand is expected to remain susceptible to sudden shifts in sentiment regarding changes in monetary policy stances in the advanced economies, and the continued uncertainty regarding the extent to which US normalisation is already priced in to the exchange rate.
“The persistently slow adjustment of the current account deficit also makes the rand vulnerable to swings in sentiment that raise concerns about the financing of this deficit.
MANUFACTURING
The outlook for the sector remains bleak with the manufacturing confidence index still at very low levels and capacity utilisation levels back at 2011 levels.
OIL/PETROL
The general expectation in the market is that these lower prices could persist for some time.
Although some of the advantage of lower international oil prices has been offset to some extent by a weaker rand exchange rate, domestic petrol prices have declined. - Reuters