Weak rand complicates monetary policy


Daniel Mminele, Reserve Bank deputy governor (pictured), says the weaker rand and market volatility seen thus far this year have "complicated" monetary policy.

In a recent speech given in London, Mminele said that at an upcoming meeting the Bank will assess whether or not current interest rates are still appropriate in the face of rising risks to inflation.

Mminele said:

"Utmost vigilance remains the order of the day, and risks will require close monitoring as we move deeper into 2016, and preparedness to take decisive action within our flexible inflation-targeting framework if the key mandate of price and financial stability comes under threat."

The rand has depreciated 44% against the dollar since the beginning of last year, while the domestic currency is down 7% already this year. The currency greatly affected the country's inflation outlook, which economists believe will necessitate several rate increases this year.

Mminele added that rand depreciation remains a significant source of risk for the South African economy.

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