Ahead of next week's rate decision, Kganyago warns parliament of weak economy

Governor of the SA Reserve bank Lesetja Kganyago.
Governor of the SA Reserve bank Lesetja Kganyago.

South African Reserve Bank governor Lesetja Kganyago warned members of the Standing Committee of Finance in Parliament that the South African economy remained weak.

The briefing comes ahead of the Reserve Bank's next Monetary Policy Committee meeting, scheduled to take place next week Thursday.

Kganyago told members of the committee that economic activity was weak and that there was insufficient investment to support job creation, meaning growth would remain low.

"Inflation remains within the targets and risks remain relatively balanced, with some key exceptions, with food prices and rand risk related to credit rating. The fiscal environment has deteriorated, leading to rising bond yields which undermines business and consumer confidence," said Kganyago.

Kganyago told the committee that the geopolitical tensions, including the United States-China trade discussions, would have a negative impact on the global growth outlook.

He said the domestic environment could be improved by stabilising the macro economic fiscal framework, reducing disruptions caused by strikes or load shedding and ensuring policy certainty.

In July, the MPC cut the repo rate by 25 basis points to 6.5% - the first cut since March 2018.

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