South African Reserve Bank Governor Lesetja Kganyago has warned that delaying interest rate increases may lead to more aggressive responses later, with the Iran War severely impacting the inflation outlook. <\/p>\n\n\n\n
Kganyago referenced a 1879 battle in the Anglo-Zulu War in his views on how to tackle the coming wave of inflation from the Iran war shocks, implying a preference to raise interest rates sooner rather than later.<\/p>\n\n\n\n
\u201cThe policy response should be to make sure that the shock becomes transitory rather than becomes persistent,\u201d Kganyago said on an International Institute of Finance panel in Washington. <\/p>\n\n\n\n
He used the analogy of the battle of Rorke\u2019s Drift, where about 150 British soldiers held off thousands of Zulu warriors. <\/p>\n\n\n\n
At the time, a British commander told his troops to \u201ctake aim at your enemy, my boy, wait until you see the whites of his eyes, and then pull the trigger,\u201d Kganyago said.<\/p>\n\n\n\n
\u201cWe do not have that luxury of waiting until we see the whites of inflation\u2019s eyes,\u201d he said. \u201cBy the time you decide to act, it might be too late.\u201d<\/p>\n\n\n\n
Kganyago pointed to the last inflation shock that followed the pandemic and Russia\u2019s invasion of Ukraine: \u201cCentral banks that responded late ended up having to respond more aggressively.\u201d<\/p>\n\n\n\n
Consumer inflation in South Africa slowed to 3% in February \u2014 hitting the central bank\u2019s target \u2014 from 3.5% in the previous month. That slowdown came before the government raised gasoline prices by the most in two decades, with fears of more to come as the conflict in the Persian Gulf remains unresolved.<\/p>\n\n\n\n
Kganyago said last month that higher energy costs may lift inflation to 4% in the near term, while fuel-price growth may accelerate to more than 18%.<\/p>\n\n\n\n
The monetary policy committee left its benchmark interest rate at 6.75% when it met last month to weigh the impact of the Iran war on the bank\u2019s inflation target, as well as other headwinds from geopolitical risks and heightened uncertainty. <\/p>\n\n\n\n
It warned that policy tightening may be necessary if the conflict drags on.<\/p>\n\n\n\n
Reporting by Matthew Hill and Ntando Thukwana from Bloomberg. This article has been amended. <\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Lesetja Kganyago has warned that waiting too long to increase interest rates could lead to rapid price increases. <\/p>\n","protected":false},"author":59,"featured_media":857353,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[1850,2760],"class_list":["post-857352","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-bloomberg","tag-sa-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/857352","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=857352"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/857352\/revisions"}],"predecessor-version":[{"id":858042,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/857352\/revisions\/858042"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/857353"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=857352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=857352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=857352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}