South Africa’s Kganyago Warns Inflation Expectations Are Rising

South Africa's central bank governor, Lesetja Kganyago, stated on May 23, 2024, that policymakers are observing initial indications of second-round inflation effects. He emphasized that underlying price pressures are accumulating, necessitating decisive action from the South African Reserve Bank (SARB). Kganyago highlighted that while headline inflation has been declining, the persistence of core inflation, which excludes volatile food and energy prices, remains a concern. He pointed to the rand's depreciation as a contributing factor to imported inflation, which can then feed into domestic price increases. The governor indicated that the SARB is closely monitoring these developments and is prepared to adjust monetary policy to anchor inflation expectations. He stressed that maintaining price stability is crucial for sustainable economic growth and that the central bank's mandate requires it to act proactively when inflation risks emerge. The comments were made during a panel discussion at the World Economic Forum Africa meeting.