South Africa has officially lowered its inflation target range for the first time in a quarter century, a move aimed at strengthening monetary policy credibility and boosting investor confidence.
Finance Minister Enoch Godongwana and Reserve Bank Governor Lesetja Kganyago announced the decision on Friday, confirming that the target range has been reduced from 3–6% to 2–5%, with the midpoint now at 3.5%, down from the previous 4.5%. The adjustment marks a major shift in the country’s macroeconomic framework.
Governor Kganyago said the revision aligns South Africa with global best practices and will help stabilize price expectations. “Anchoring inflation closer to 3% supports sustainable growth and protects the poor from the erosion of purchasing power,” he said at a press briefing in Pretoria.
Economists cited by Bloomberg and Reuters noted that the change signals confidence in the Reserve Bank’s inflation management, which has kept inflation largely within target in recent years despite energy and wage pressures. The new target is expected to take effect in 2026, giving markets time to adjust.
The move was welcomed by investors, with the rand strengthening slightly following the announcement. Analysts said the lower target could also pave the way for lower borrowing costs in the long term if inflation expectations remain stable.
