The South African Reserve Bank expects inflation will cool sharply and return to its 3% target by the end of next year, Governor Lesetja Kganyago said.
Inflation has been above that level since March as supply constraints due to wars in the Ukraine and the Middle East have kept energy prices elevated.
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In a speech on Monday that highlighted the cascading shocks buffeting the global economy, Kganyago said tighter monetary policy would help cool inflation.
“We expect inflation to slow significantly next year, and we have increased our policy rate to make sure we get back to 3%,” he told the Mistra Forum in Johannesburg, according to his speech text. “We currently expect to get there around the end of next year.”
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The Sarb raised rates by 25 basis points to 7.25% last week in a well-anticipated move.
“It has been about six months since we last hit our inflation target,” Kganyago said. “I am not happy that we are missing — but six months is a lot better than 67 months, which is the interval since US inflation was last at target.”
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