http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.16Change: 0.09
R/$ = 11.20Change: 0.08
Au 1214.06 $/ozChange: -2.20
Pt 1274.00 $/ozChange: -14.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Nov 15, 2011

Monetary policy focus remains on hitting inflation target – Marcus

Back
Reserve Bank governor Gill Marcus discusses the country's monetary policy focus. Editing: Lionel da Silva
Johannesburg|Africa|Environment|Ports|Africa|South Africa|Energy|Gill Marcus|Infrastructure|Rail
|Africa|Environment|Ports|Africa||Energy|Infrastructure|Rail
johannesburg|africa-company|environment|ports|africa|south-africa|energy|gill-marcus|infrastructure|rail
© Reuse this



The Reserve Bank would maintain its monetary policy focus on achieving the inflation target of between 3% and 6% over the medium term, but would remain sensitive to the domestic economic situation, governor Gill Marcus said on Tuesday.

The “challenging times of uncertainty and possible unthinkable consequences in the European environment”, made it difficult for South Africa to pre-empt its policies, she said at a Swiss Chamber of Southern Africa event in Johannesburg.

The Reserve Bank kept its repo rate at a 30-year low of 5.5% last week.

Marcus said that there was a risk of stagflation in the domestic economy, with inflation rising and domestic growth still sluggish.

It still appeared that inflation was being driven by cost-push factors, as illustrated by the benign core inflation outcomes. However, the interaction between higher headline inflation and inflation expectations of wage and price setters was critical, Marcus said.

“To date inflation expectations appeared to be anchored at around the upper level of the target range, but the longer inflation remained outside the target, particularly if it surprises on the upside, the more precarious these expectations become, and the greater the upside risk to the inflation outlook,” she explained.

The Reserve Bank, she said, saw medium-term inflation outside the target range at this point, and regarded the breach, although extended, to be temporary.

In addition, the weak state of the economy also impacts on the approach taken.

“But we have to be vigilant on both sides. There is always a possibility of upside surprises to growth or a dislocation of inflation expectations from the target range, which could take inflation well above the target range.

“However, on the other side, although our assumption for European growth has been lowered, it does not contain the worst case scenario of a meltdown in the eurozone, which would have severe implications for the global economy and South Africa. Although this is seen as a tail risk, it is not a remote possibility.”

Also, the volatility of the rand would be determined by bouts of risk aversion in global financial markets.

The general expectation, said the governor, was that the rand was unlikely to return to previous levels of below R7 to the dollar, but to appreciate somewhat from current levels.

But, she said that a weaker rand also comes with its advantages, making exports more competitive and imported goods more expensive - providing a boost to domestic producers.

“This is in effect an easing of monetary conditions for domestic producers. However, this advantage will be short-lived if offset by higher wage and other input costs which offset the advantage faced by producers.”

But Marcus pointed out that an accommodative environment could not, on its own, generate the higher rates of growth that the South African economy required for employment creation.

Part of the solution, she explained, would need to come from improving much-needed infrastructure, such as in the energy, rail and ports sectors, which would strengthen export capacity.

There was also a need for sustained efforts to enhance South Africa’s ties with its traditional trading partners and also develop new trading relationships outside the eurozone.

“In these troubled times, it is important that trade relationships are not only preserved but enhanced. We are certainly living in interesting but difficult times, because the possibility that things can go horribly wrong is very high,” she said.
 

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Economy News
Finance Minister Nhlanhla Nene
Updated 9 minutes ago The Public Investment Corporation (PIC) is to sink $1-billion into African investments and equities, according to Finance Minister Nhlanhla Nene. "The PIC will, in the new financial year, also focus on developmental investments in Africa, with a minimum commitment of...
Mark Shuttleworth
Updated 3 hours ago The Supreme Court of Appeal (SCA) on Wednesday ordered the South African Reserve Bank (SARB) to repay entrepreneur Mark Shuttleworth R250-million plus interest in a case about exchange controls. In a statement on his website, Shuttleworth pledged to put the money,...
Updated 3 hours ago An upward revision of Kenya's economic output shows that the country's economic reforms are paying off, with the potential for future growth to exceed 6% a year, an International Monetary Fund (IMF) official said on Wednesday. Kenya announced on Tuesday that last...
Article contains comments
More
 
 
Latest News
Finance Minister Nhlanhla Nene
Updated 9 minutes ago The Public Investment Corporation (PIC) is to sink $1-billion into African investments and equities, according to Finance Minister Nhlanhla Nene. "The PIC will, in the new financial year, also focus on developmental investments in Africa, with a minimum commitment of...
Updated 2 hours 4 minutes ago The lateral movement in the South African Chamber of Commerce and Industry’s (Sacci’s) Copper Theft Barometer for August could again point to the possibility that levels of copper theft were stabilising, the chamber noted on Thursday. The Copper Theft Barometer...
Mark Shuttleworth
Updated 3 hours ago The Supreme Court of Appeal (SCA) on Wednesday ordered the South African Reserve Bank (SARB) to repay entrepreneur Mark Shuttleworth R250-million plus interest in a case about exchange controls. In a statement on his website, Shuttleworth pledged to put the money,...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
The latest TransUnion Vehicle Pricing Index (VPI) contains a number of small, but significant indications that the tide may at last be turning for the beleaguered used car industry. For the third successive quarter, used car inflation has increased on a year-on-year...
The South African new vehicle market is likely to reach around 630 000 units in 2014, down from the 650 000 units recorded in 2013, says Toyota South Africa Motors (TSAM) president and CEO Dr Johan van Zyl. Van Zyl is also president of the National Association of...
Efforts by the Kenya government to increase energy generation by 5 000 MW over the next three years received a major boost following the award of a $2-billion contract to build a coal power plant in Lamu.  Despite allegations of irregular tendering process, the...
Using crafty wordplay on a well-known Internet meme, brilliant South African-born US entrepreneur and businessperson Elon Musk announced that Tesla Motors would not initiate patent lawsuits against anyone who, in good faith, wanted to use its technology. Instead,...
August new vehicle sales declined by 1.4%, to 55 722 units, compared with the same month last year. Assisted by the car rental market, the South African new passenger car market, at 37 953 units, contracted by 1 047 units, or 2.7%, compared with August last year.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks