The South African Reserve Bank has also been closely monitoring the broad-based measures of inflation expectations, in particular the Bureau for Economic Research’s surveys of analysts, businesspeople and trade unions, which have shown greater stability over the past three to four years yet have remained anchored around the upper limit of the Bank’s inflation target range.
With inflation expected to overshoot its target range for two quarters in 2016, the Bank has been wary of any possible un-anchoring and/or an upward drift in these expectations. As a result, it stands ready to tighten policy further should such adverse developments occur. The Bank’s Monetary Policy Committee has repeatedly indicated that it sees itself in a gradual tightening cycle.