South African Reserve Bank Governor Lesetja Kganyago said inflation could fall below 4% in the coming months, creating more room for action after officials cut interest rates in September.<\/p>\n\n\n\n
“We expect the next two or three prints; that they could have a three handle on them, and that provides policy space for us,\u201d Kganyago told South African lawmakers in Cape Town on Thursday. <\/p>\n\n\n\n
\u201cThe headline disinflation is mainly supported by petering global supply shocks.\u201d<\/p>\n\n\n\n
The central bank\u2019s forecasts see consumer price growth settling at 3.6% in the last quarter of this year and averaging 4% in 2025.<\/p>\n\n\n\n
Official inflation data showed consumer price growth slowed to 4.4% at an annual rate in August, falling back below the midpoint of the bank\u2019s 3% to 6% target range where it prefers to peg price expectations.<\/p>\n\n\n\n
Cooler inflation encouraged policymakers to cut rates by 25 basis points last month to 8%.<\/p>\n\n\n\n
Core inflation, which excludes food and energy costs and slowed to 4.1% in August, suggests that \u201cthe disinflation process is now firmly underway,\u201d Kganyago said.<\/p>\n\n\n\n
South Africa\u2019s inflation outlook is benefitting from an upswing in business confidence following the formation of a broad governing coalition after the May elections that included centrist parties. <\/p>\n\n\n\n
This coalition has boosted the rand and helped to dampen import prices.<\/p>\n\n\n\n
\u201cThere is now a positive vibe about South Africa,\u201d Kganyago said, adding that the economy probably continued its rebound in the third quarter after expanding 0.4% in the prior three months. <\/p>\n\n\n\n
\u201cIn spite of other emerging-market currencies, the South African rand has been strengthening, which means we have been able to flush out the bulk of the negative news that was actually embedded in South African financial asset prices,\u201d he said.<\/p>\n\n\n\n