In commenting on the latest South African Reserve Bank (SARB) monetary policy review, Prof Raymond Parsons, economist from the North-West University (NWU) Business School, says it is now more urgent than ever to implement growth-friendly policies and projects.

The SARB’s comprehensive monetary policy review confirmed that both global and domestic economic trends are likely to keep borrowing costs high for longer, perhaps well into 2024.

Prof Parsons says this is primarily the result of most central banks, including the SARB – although seeing overall inflation as easing – still gauging inflation trends as sticky.

“The SARB views the present inflation outlook in South Africa as being on an uncertain trajectory, and if this view persists by the next meeting of the Monetary Policy Committee in November, the data may again warrant another hawkish pause.”

He says the monetary policy review highlighted the emergence of an even higher fiscal deficit than was previously expected, and a shortfall developed on the current account of the balance of payments.

“These twin deficits will need to be addressed in the Medium-Term Budget on 1 November in ways that reduce uncertainty, boost confidence and promote growth. As the monetary policy review has for now taken monetary policy as far into restrictive territory as possible, it is more urgent than ever to implement growth-friendly policies and projects. All eyes will be on the Medium-Term Budget to produce sustainable fiscal outcomes,” he concludes.