Online Reporter
South African Reserve Bank (SARB) Governor Lesetja Kganyago says the central bank and the National Treasury have agreed to lower the country’s inflation target but are still deciding on the timing of the change.
The consensus comes after a public disagreement in July over the appropriate inflation range, a dispute that had stirred uncertainty in financial markets and raised questions about coordination between the two top economic institutions.
According to South African Reserve Bank (SARB) Governor, Kganyago, the move is meant to reinforce economic stability and strengthen investor confidence amid global market uncertainty.
Speaking before lawmakers on Thursday, Kganyago clarified that there was “no disagreement” on the goal itself.
“It’s a question of timing,” he explained. “The poor chaps are working very hard to make sure that all those loose ends are tied.”
He also acknowledged that the SARB’s earlier communication, when he surprised markets by announcing a de facto 3 percent inflation target, had “not been what it was supposed to be.”
Finance Minister Enoch Godongwana had previously rebuked Kganyago for acting unilaterally, though the two later issued a joint statement reaffirming alignment on the broader policy direction as per Reuters.
Kganyago has long argued that South Africa’s current 3–6 percent inflation band makes the economy less competitive.
With inflation pressures relatively subdued in 2025, he said the moment was right to “lock in” low inflation and anchor expectations.
“The lower inflation and SARB’s preference for a tighter target have boosted the rand and reduced government borrowing costs by 80 to 160 basis points since April,” Kganyago noted.
“When the cost of borrowing for the government comes down, the cost of borrowing for everybody else also comes down.” — Bloomberg
