Johannesburg - South Africa’s monetary policy dilemma had become more notable after the economy shrunk in the three months to March, according to Reserve Bank governor Lesetja Kganyago.
“South Africa is facing a policy dilemma,” Kganyago said in an interview yesterday. “A policy dilemma of high inflation and low growth, and that dilemma has become more pronounced now with the contraction that we are seeing in the first quarter.”
The central bank will announce its next interest-rate decision on July 21 and has said inflation would only return to the target band in the third quarter of next year. While price growth slowed to 6.1 percent last month, the lowest this year, Kganyago said the risks to the outlook remained on the upside.
The central bank was not under any pressure to make certain decisions, Kganyago said. “We are acting independently, we are not under pressure from any quarter,” he said.
BLOOMBERG