Inflation expectations are showing an “encouraging” decline toward the midpoint of the central bank’s target range while the country’s financial system remains stable, according to South African Reserve Bank Deputy Governor Daniel Mminele.
“In contrast to many other emerging markets, inflows of nonresident capital, be they portfolio flows or bank loans, have not spilled over into excessive domestic credit growth,” Mminele said in a speech late on Tuesday. “Nevertheless, because of the nature of South Africa’s economy — which is a relatively small and open one, vulnerable to external shocks, yet one where the domestic price and wage formation process is fairly rigid — the fight to stabilise inflation is far from over.”