Although the rand has appreciated from the levels of R10.40 during August 2013, it remains vulnerable to changes in the global and domestic environment. Furthermore, while inflation expectations appear to be anchored and relatively stable, expectations are uncomfortably close to the upper end of the inflation target range.
Growth remains below potential with a widening output gap and is expected to average only 2.0 per cent in 2013 and 3.3 per cent in 2014. The leading indicator of the Bank suggests that the moderate growth rates are set to continue, while protracted work stoppages in the mining and manufacturing sectors are likely to detract from growth going forward.