South African Reserve Bank Governor Lesetja Kganyago has signaled that the central bank is prepared to raise interest rates again at its upcoming July policy meeting, intensifying pressure on local bond markets and the rand.
Kganyago defended the bank’s surprise rate increase in May, arguing that inflation expectations have drifted above the 3% target.
He warned that delaying further action could force the central bank to implement more aggressive tightening measures later in the year.
He warned that delaying further action could force the central bank to implement more aggressive tightening measures later in the year.
The hawkish stance comes as domestic price pressures accelerate.
Annual producer inflation in South Africa jumped to 7.8% year-on-year in May, up from 4.8% in April, driven largely by a spike in petroleum prices.
This marks the second consecutive month of acceleration, underscoring the persistent inflationary risks Kganyago highlighted.