South African inflation expectations declined for the first time in two years, suggesting price-pressures have peaked and the central bank will be able to keep interest rates on hold.
Average inflation expectations for this year fell to 6.1% in the third quarter from 6.5% previously, according to a survey released on Monday by the Stellenbosch-based Bureau for Economic Research. The rate of price growth for 2024 is now seen declining to 5.5% from 5.9% and to 5.3% from 5.6% in 2025, according to participants in the poll of analysts, business people, labour unions and households.
The survey results influence decision making by the South African Reserve Bank’s monetary policy committee, which prefers to anchor inflation expectations close to the 4.5% midpoint of its target range. Its preferred indicator for medium-term inflation expectations is two-years-ahead. The central bank’s MPC has raised the key interest rate by a combined 475 basis points to 8.25%, at 10 straight meetings to contain inflation, before pausing in July.
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