Reuters
 
RESERVE Bank governor Tito Mboweni told parliament’s finance committee on Friday that a period of stimulatory monetary policy may be coming to an end, as inflation pressures were building in the economy.

"Although we are within the (inflation) target indications are that inflationary pressures are building up in the economy," he said.

"...One does not really need to be a sangoma (seer) to see that there are some red lights at the distance indicating the possibility that the period of monetary accomodation as is at present might be coming to an end."

Mboweni’s remarks to parliament’s finance committee reinforced the message he sent on Thursday, when he told analysts at a Reuters breakfast that the central bank must not fall "behind the curve" on monetary policy.

The Bank lowered its key repo rate by 6.50 percentage points to 7% over the past couple of years, driving commercial lending rates to their lowest level for more than two decades and fuelling a consumer spending boom.

"More hawkish comments which lends itself to a further bearish flattening on the local yield curve as interest hike fears are intensified," Econometrix Treasury Management analyst Michael Keenan said.

Domestic bonds weakened slightly on the governor’s comments, with yields on the benchmark R153 bond due 2010 rising 1.5 basis points to 7.955%. The rand firmed to R6.58 per dollar from R6.59 per dollar.