South Africa’s central bank statement says it sees upside risks to inflation; sees downside risks to growth

FORECASTS: 

Growth forecasts have been marked down, while inflation forecasts were revised higher

• 2026 CPI is seen at 4.4% (vs prev. 3.7%), while 2027 CPI is seen at 3.7% (vs prev 3.3%).
• 2026 core CPI is seen at 3.7% (vs prev. 3.3%), while 2027 core CPI is seen at 3.7% (vs prev. 3.3%).
• 2026 GDP growth is seen at 1.2% (vs prev. 1.4%), while 2027 GDP growth is seen at 1.7% (vs prev. 1.9%).
• 2026 fuel inflation is seen at 15.6% (vs prev. 7.4%).

STATEMENT

• Projections entail some second-round effects, though there is no clear confirmation of these effects in the data.
• The statement says three scenarios imply higher inflation and lower growth, and all show some monetary policy tightening.
• Three scenarios imply higher inflation and lower growth, and all show some monetary policy tightening.
• Longer strait closure has inflation at 5%, with two more rate hikes, while the most adverse scenario has three rate hikes.