4 2017. While it is a cause for concern, the main drivers are supply side shock: oil and food prices especially.
Risks to the inflation outlook are seen moderately on the upside.
Rand
Since the last MPC meeting the rand has displayed a degree of resilience, trading in the 14:22 – 13:46 range to the US dollar; it appreciated 5.6% to the dollar and 4.2% on a trade-weighted basis. It was positively impacted by the rating agencies decisions not to downgrade the country, although this remains a risk in coming months.
The rand was also positively impacted by the improvement in commodity prices.
The rand has been relatively resilient. Pass through to inflation continues to be relatively muted. Remains vulnerable to domestic and external shocks.
Global outlook
Bond market expectations declained accross all maturities since prev meeting, but remain above target range.
Current account deficit expected to narrow over the forecast period, it remains relatively wide.
Global growth uncertain.
Great uncertain re US new admin, esp size of fiscal stimulus. Growth expected strong, downside risks due to stronger dollar
steady, slow growth recover in euro zone seen contining, elections could pose risks.
EMs unclear outlook, given conflicting devts. Commodity prices up in recent months, but protectionist threats from US could have negative effect on EMs in particular.
fears of unsustainable credit bubble
tentative signs of global inflation edging up.
US Fed tightened monetary policy in Dec and signaled more to come.
Mining production contracted in October and November. Improved commodity prices are expected to help the sector in coming months.
Unemployment increased to 27.1%. Wage growth appears to be responding to the weak labour market environment
Consumers remain under pressure, consumer confidence low.