“We are focused on the outlook for the South African economy for both growth and inflation. The job is not yet done,” Lesetja Kganyago told Bloomberg Surveillance in Jackson Hole, Wyoming last week. 

“The decline in inflation is welcome. But we’ve just had two good prints of inflation. That does not mean that the inflation monster has been conquered. There are still risks on the horizon and we will watch that very closely,” he said.

His comments came just days after data from the statistics office showed South Africa’s inflation had eased to a two-year low of 4.7% in July from 5.4% the month before.

The Reserve Bank’s monetary policy committee held interest rates at 8.25% last month after raising borrowing costs by a combined 475 basis points at its 10 prior meetings. It aims to bring inflation back to the 4.5% midpoint of its target range, where it prefers to anchor expectations.

The central bank expects inflation to average 6% this year, 5% in 2024 and 4.5% in 2025.

One of the risks to its forecasts is the currency, Kganyago said. 

“On the horizon, we actually see the exchange rate as one of the risks to the inflation outlook. So if there was to be a weakness in the currency, it does have implication for the inflation outlook,” he said. He also qualified that comment slightly by noting that the bank’s research has found the pass-through effect of currency weakness to price pressures has moderated.

The rand has depreciated almost 9% against the dollar this year, making it the fourth-worst performing emerging market currency of those tracked by Bloomberg.