The South African Reserve Bank published a speech by Governor Lesetja Kganyago arguing that the global economy is facing a more difficult environment shaped by geopolitical conflict, high and rising sovereign debt, widening global imbalances and growing financial market vulnerability. He said these shocks are especially challenging for monetary policy because they can lift inflation while suppressing output, so the policy task is to keep inflation expectations anchored and return inflation to target once the shock passes, potentially through timely interest rate moves. The speech highlighted United States public debt above 120% of gross domestic product, global imbalances near their highest levels in 150 years with the United States running large deficits and China large surpluses, private credit markets that have expanded to USD2.5 trillion with limited transparency, and extreme valuations for artificial intelligence companies. Kganyago said South Africa is among a group of more resilient middle-income economies, noting that the rand recovered quickly after the Middle East conflict and has mostly been stronger than in 2025, when it averaged ZAR17.89 per USD, but he stressed that inflation is not yet anchored at the 3% target, debt remains high, growth is barely 1%, and continued fiscal adjustment and broader domestic reform are still needed.
South African Reserve Bank 2026-05-06
South African Reserve Bank Governor warns geopolitical conflict, debt, imbalances and market risks are rising and says South Africa must stay on reform path
The South African Reserve Bank published a speech by Governor Lesetja Kganyago warning that geopolitical conflict, high sovereign debt, large global imbalances and growing financial market vulnerabilities are creating a more difficult environment for monetary policy, which must keep inflation expectations anchored and return inflation to target after shocks via timely interest rate moves. He highlighted United States public debt above 120% of gross domestic product, global imbalances near 150-year highs, a USD2.5 trillion opaque private credit market and extreme artificial intelligence valuations, while noting South Africa’s relative resilience but stressing that inflation is not yet anchored at the 3% target, debt is high, growth is about 1% and further fiscal adjustment and domestic reform are required.