The real effective exchange rate of the rand has also recovered somewhat, while world agricultural prices are expected to provide more of a drag on domestic food inflation. Importantly, core inflation forecasts have been revised downwards too. Projections for 2021, published for the first time in January, show both headline and core inflation falling back below 5% in this end-part of the forecast.
Banks’ profitability has reduced partly as a result of loan provisioning and a slight drop in the net interest margin. The banks’ total regulatory capital position remains very strong at 22.5 percent of risk weighted assets as at end of September 2014 which is almost double the statutory minimum of 12 percent.