Given these uncertainties, the MPC decided to assign a higher upside risk to the forecast, and wait for the outcome of the Nersa decision, due at the end of June, before changing the electricity price assumption. But in the meantime, we have analysed the impact of a number of scenarios on the inflation forecast.
A scenario where the full 25 percent increase is granted to Eskom would increase inflation over a year by about 0,5 percentage points. Perhaps the most contentious assumption is that of the policy interest rate. There is no unanimity among central banks as to how to deal with this issue. Broadly, there are four different approaches.