SARB's Kganyago on Tighter for Longer Policy, 'Undervalued' Rand

The transcript discusses the impact of the Rand's volatility on inflation, emphasizing that sustained weakness could affect inflation. It highlights the Rand's undervaluation and the importance of monitoring its trends. The inflation trajectory in South Africa is analyzed, noting its persistence and the expectation of returning to target ranges. The discussion covers monetary policy adjustments in response to inflation risks, with a focus on maintaining tight policy longer than expected. The duration of policy is linked to inflation targets, emphasizing state-dependent adjustments.

What is the main concern regarding the Rand's volatility?

• It causes immediate changes in interest rates.

• It impacts the stock market directly.

• It could lead to sustained inflation.

• It affects international trade agreements.

How did the inflation rate change in South Africa over the past year?

• It decreased rapidly from 7.8% to 3%.

• It fluctuated between 5% and 6%.

• It increased from below 3% to 7.8% and then decreased slowly.

• It remained stable at around 3%.

What does 'higher for longer' refer to in the context of central bank policy?

• Keeping interest rates unchanged indefinitely.

• Lowering interest rates gradually.

• Increasing interest rates continuously.

• Maintaining higher interest rates for an extended period.

What determines the central bank's decision to recalibrate policy?

• The unemployment rate.

• The stock market performance.

• The exchange rate of the Rand.

• The sustainability of inflation decline towards the target.

Why is it too early to decide on a pause in policy adjustments?

• Due to political instability.

• Because the market has already priced in changes.

• Due to the unpredictability of inflation trends.

• Because interest rates are already low.