South African financial markets are unlikely to be severely disrupted as global central banks normalise policy, and a balanced inflation outlook means domestic interest rates can stay low, Governor Lesetja Kganyago said on Thursday.
"Our inflation is contained. Monetary policy will not come with a stance that tries to stem capital outflows. ... For as long as inflation on a forward-looking basis is contained, there's no need to adjust policy," he said. The central bank of Africa's most industrialised nation slashed lending rates by 300 basis points to a record low of 3.5% in 2020 to soften the impact of COVID-19, but it has kept them on hold at its last four policy meetings.
"Foreign investors are well-rewarded in South Africa at the moment. Our bond yields are significantly higher than bond yields in the advanced economies, and we are higher than many emerging market economies in real terms," he said.