High interest rates will not cause a recession, says Kganyago

GDP data from the first half of the year showed that the economy remained resilient, coming in above expectations, in spite of challenges.

Kganyago said real interest rates had gone up because the effects of the 10 consecutive increases in interest rates were only now being felt in the economy; hence, the downward trajectory in CPI. At its highest, the CPI reached 7.8% in July last year. Nedbank economist Liandra da Silva said food price inflation estimates were revised slightly higher to 10.4% , mainly due to concerns about the impact of the El Niño weather pattern on agricultural production.

Chief economist at FNB Mamello Matikinca-Ngwenya said higher global funding costs and adverse risk sentiment would be exacerbated by poor local economic growth, a worsening current account deficit, and unfolding fiscal risks.She stated:"This should continue to weigh on the rand and, along with the lift in international oil prices, provide impetus to transportation costs and imported inflation – maintaining pressure on operating costs.

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