By Stella Mapenzauswa
PRETORIA, July 27 (Reuters) – The risks to South Africa’s
moderate inflation outlook are external and further interest
rate easing will not be automatic, Reserve Bank Governor Gill
Marcus said on Friday.
“Given the subdued domestic economy, the risks to the
inflation outlook are mainly of a cost-push nature,” Marcus told
reporters at the Reserve Bank’s annual general meeting,
referring to higher input costs.
The bank has said upside risks to the inflation outlook
emanate from the oil price and the rand exchange rate.
The bank surprisingly cut interest rates to 5 percent last
week, after keeping rates steady for 19 months, citing concern
about the effect of the global economic downturn on Africa’s
largest economy.
It cut its inflation forecast to 5.6 percent for 2012, from
6 percent as recent prices came in below market expectations.
“There has been much speculation as to whether this was a
beginning of a renewed interest rate easing cycle. Further
monetary easing is not automatic and will be highly dependent on
global and domestic developments,” Marcus said.
Marcus also said there was no evidence of interest-rate
rigging in South Africa, suggesting local banks would avoid the
scandal currently plaguing British rivals.
Continued…
