| Mboweni still sounds hawkish on rates |
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"Taking out food and energy prices, we still see the trend is on the upside, meaning that we are experiencing some second-round effects arising out of food and energy," he said.
He had sympathy with Eskom, which is seeking higher electricity prices, but said the bank would be in talks with the parastatal to find another way of financing its infrastructure building programme. "The costs they [will] have to incur to bring about new infrastructure are quite significant. The longer the process is delayed, the higher the costs are going to be."
Mboweni raised the possibility that the monetary policy committee would raise the repo rate next month. Action by the bank to moderate consumer spending and thus lower inflation had been undermined by the exogenous shocks of high rises in food and fuel costs.
His comments come in the wake of news that CPIX, the consumer price index minus mortgage costs, hit a five-year high last month of 9.4 percent.
Asked by Democratic Alliance (DA) MP Kobus Marais if a further interest rate rise would represent an "overkill" of the demand side of the economy, Mboweni said he did not believe South Africa was "in a period of overdose".
He noted that the country had seen much higher interest rates during the late 1990s. "I don't think we are going there."
He dismissed a suggestion by DA MP Leon George that a new model of core inflation - excluding food and fuel - could be considered, saying: "Any real investor would still look at the real inflation rate."
He emphasised that monetary policy stability was critical to perceptions of the country by non-resident investors.
Mboweni also dismissed concerns that the independence of the bank would be undermined, in response to a parliamentary rules committee report urging reform of parliament's oversight function.
"Unless the constitution is changed, the independence of the bank stays," Mboweni said.
He added that it could not be suggested that proposed changes to legislation amounted to MPs wanting to determine interest rates.
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