After all, demand remains weak and credit creation is sluggish, and in many countries these would be sufficient conditions for inflation to fall further. Equally, many risks, both external and internal, could result in higher inflation should they materialise.
Among the former, exchange rate volatility remains a key factor of uncertainty in light of South Africa’s reliance on portfolio flows to fund what is, by emerging market standards, and its current level of growth, a relatively large current account deficit.