Domestic demand in South Africa – and this includes household consumption as well as fixed investment – has always been import-intensive, even in periods of prevailing economic slack. And while our  Page 9 of 11  estimates of the output gap point to some degree of slack in the economy, others (such as capacity utilization in manufacturing) paint a more ambiguous picture.
Fourth, the risks to the inflation outlook appear presently too skewed to the upside to allow the SARB to embark on a sizable monetary stimulus without fears of a sustained overshoot in the inflation target range. Ongoing careful assessment of evolving data and vigilance continue to be imperative.