September 26, 2002

SOUTH AFRICA: Worried by Middle East war threat

Reserve Bank Governor Tito Mboweni has acknowledged he is keeping his fingers crossed that war will not break out in the Middle East, as it would change all the bank's assumptions about oil prices. Speaking to the finance portfolio committee of the National Assembly at Parliament on Wednesday, September 25, Mboweni sayd the Reserve Bank remains vigilant on its 3% to 6% inflation target for next year and between 3% and 5% in 2004.

While emphasising that the inflation targeting is not under threat, Mboweni said some difficulties could be faced "on account of the threat of war in the Middle East... We are keeping our fingers crossed that there is no war," the governor said. "If war breaks out, all our assumptions on oil prices disappear into nothing."

Mboweni made the comments in response to Democratic Alliance finance spokeswoman Raenette Taljaard who asked whether the inflation target of the bank was under threat. (BUSINESS DAY ONLINE)

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