South African Reserve Bank (SARB) Governor Lesetja Kganyago says the central bank remains firmly committed to driving inflation down toward its three percent target, despite persistent global shocks.
Addressing the Reserve Bank’s annual shareholders general meeting in Pretoria, Kganyago stressed that lower inflation is essential for bringing interest rates down in the long run.
He also reassured shareholders of the central bank’s underlying financial strength, pointing to a significant growth in South Africa’s foreign exchange reserves over the past decade.
Kganyago says external shocks are inevitable, but the Reserve Bank’s focus remains on protecting the rand’s purchasing power.
“Last year we made a choice to have lower inflation. Yes, we have now been hit by a shock that was completely exogenous and has nothing to do with our choices. But shocks will happen. For the SARB, our job is to ensure inflation reverts to target. Monetary policy does not control the prices of individual goods and services. But we do have a lot of influence over the longer-run buying power of the rand, across a broad purchase basket, and we intend to protect that,” says Kganyago.