* Inflation likely also being driven by demand pressures
* CPI could return to target by year-end
* Investment lacking, consumer-driven growth undesirable
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By Xola Potelwa
JOHANNESBURG, March 15 (Reuters) – Inflation pressures
in South Africa are now likely becoming more generalized,
reflecting demand-side pressure rather than only external
factors, the central bank warned, seeming to signal an eventual
monetary tightening.
“In general, monetary policy can do little to combat the
impact or first round effects of inflation that is driven by
exogenous shocks,” South African Reserve Bank Governor (SARB)
Gill Marcus said in a statement on the bank’s website on
Thursday.
“However, the most recent data seem to suggest that
inflation is becoming more generalized, and may reflect the
emergence of demand pressures. This is something that the Bank
will monitor very carefully,” he said.
The central bank has kept interest rates unchanged at
30-year lows of 5.5 percent, after a cumulative 650-basis-point
reduction in the two years to November 2010.
“Alarm bells went off in my head because this is the first
time ever since the crisis that we’ve had the SARB saying this
sort of thing,” said Razia Khan, head of Africa Research at
Standard Chartered.
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