South African central bank chief Lesetja Kganyago flagged that dollar depreciation because of US tariffs and deflation in China are clouding the outlook for inflation locally ahead of a rate-setting meeting at the end of the month.<\/p>\n\n\n\n
After reneging on plans to impose sweeping duties on US trading partners earlier this year, President Donald Trump renewed his threat to institute them by 1 August unless nations reach bilateral trade deals with it. <\/p>\n\n\n\n
The country is South Africa\u2019s largest trading partner after China.\u00a0<\/p>\n\n\n\n
\u201cThe big thing about the tariffs is that they would impact on economic activity,\u201d Kganyago told Bloomberg in an interview Tuesday on the sidelines of a meeting of the Group of 20 bloc of nations just outside South Africa\u2019s eastern port city of Durban. <\/p>\n\n\n\n
\u201cWhat you will face is that you might end up with inflation yourself.\u201d<\/p>\n\n\n\n
Price increases normally affect the nation that imposes tariffs, but if other countries start retaliating, \u201cthen you might have a general rise in prices globally,\u201d he added.<\/p>\n\n\n\n
On the other hand, China might be facing deflation, the governor said. <\/p>\n\n\n\n
\u201cChina is a big manufacturer. It\u2019s like a factory of the world. And the effect would be, or could be, that they would be exporting deflation or disinflation,\u201d he said.<\/p>\n\n\n\n
That could have the impact of offsetting the higher prices caused by tariffs, Kganyago added.<\/p>\n\n\n\n
\u201cEconomic relationships that we relied on to discern where we think the economy would go as a result of these developments are moving in directions that we were not used to, and that adds to the uncertainty,\u201d he said.<\/p>\n\n\n\n
The uncertainty has economists divided on what South Africa\u2019s monetary policy committee may do when it gives its interest-rate decision on 31 July. <\/p>\n\n\n\n
Some expect it to extend its easing cycle because inflation has been near or below the floor of the MPC\u2019s target range of 3% to 6% for eight consecutive months. Others expect it to hold.\u00a0<\/p>\n\n\n\n
The committee cut the benchmark interest rate by 25 basis points to 7.25% in May.<\/p>\n\n\n\n
Kganyago also warned that if implemented, tariffs are likely to impact the agricultural and automotive sectors, boding badly for economic activity.<\/p>\n","protected":false},"excerpt":{"rendered":"
Reserve Bank governor Lesetja Kganyago says US tariffs and deflation in China are making South Africa’s inflation outlook murky, which is likely to impact the central bank’s rate decision later this month.<\/p>\n","protected":false},"author":59,"featured_media":826027,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[2922,8927,2924],"class_list":["post-831628","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-interest-rates","tag-lesetja-kganyago","tag-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/831628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=831628"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/831628\/revisions"}],"predecessor-version":[{"id":831632,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/831628\/revisions\/831632"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/826027"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=831628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=831628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=831628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}