Johannesburg - The SA Reserve Bank has had a difficult task in balancing the needs of a slowing economy with rising inflation, its deputy governor Daniel Mminele said on Wednesday.
“For a while now, our policy decisions have had to balance the diverging needs of slowing growth with rising inflation in a global environment riddled with uncertainty and volatility,” Mminele said in a statement prepared for delivery at a conference titled 'South Africa Tomorrow' in New York, USA.
“That is not an easy task for an inflation targeting central bank.”
The depreciation in the exchange rate of the rand had also impacted on the inflation forecasts.
“Underlying inflation is also moving higher, owing to the lagged effects of the depreciation in the exchange rate and rising unit labour costs.”
Mminele said recent wage negotiations had generally settled above inflation, and that the impact on inflation would be dependent on productivity levels.
“Food inflation has also been on the rise, although the downward trend in international food prices has to some extent offset the impact of the weaker rand.”
The bank had appropriate policy measures within the inflation targeting framework to ensure that it reacted appropriately to the changing environment, Mminele said.