News24 | Inflation expectations ease ahead of interest rate decision

Central bank Governor Lesetja Kganyago said this month the monetary authority would continue to be measured in its approach to the aftereffects of polyshocks such as higher oil prices and the El Niño weather phenomenon that may reduce rainfall in the coming months, causing food costs to increase.

Getty Images

• For more financial news, visit News24 Business. 

A closely watched gauge of South African inflation expectations fell in the third quarter, days before policymakers meet to decide on interest rates.

Average inflation expectations two years ahead dropped to 3.8% in the third quarter from 3.9% previously, according to a survey released on Wednesday by the Stellenbosch-based Bureau for Economic Research.

The central bank’s monetary policy committee prefers expectations around its 3% inflation goal.

The drop may provide the MPC with room to again hold its benchmark interest rate at 7% on Sept. 23 to support an economy battered by surging energy and fertiliser prices caused by escalating tensions in the Middle East. South African gross domestic product contracted 0.2% in the second quarter, snapping six quarters of growth.

Central bank Governor Lesetja Kganyago said this month the MPC would continue to be measured in its approach to the aftereffects of polyshocks such as higher oil prices and the El Niño weather phenomenon that may reduce rainfall in the coming months, causing food costs to increase.

Since the last survey three months ago, inflation peaked at 5% in June and moderated to 4.3% the following month.

Discover the Truth

Step into a world where the truth shines bright, and every headline is worth your time. With News24, you're not just reading the news; you are part of a community that values knowledge and insight. Immerse yourself in compelling stories, sharp analyses, and content that keeps you ahead of the curve.