South African policymakers have reached broad consensus on the need to lower the country’s inflation target, though discussions continue over when to implement the change. South African Reserve Bank (SARB) Governor Lesetja Kganyago confirmed that both the central bank and the National Treasury now align on the direction of policy, following earlier disagreements about timing, as reported by Reuters.
Kganyago clarified that the debate centers on when, not whether, to lower the target. “There isn’t a disagreement about the lowering of the target; it’s a question of timing,” he told lawmakers, noting that technical teams from both institutions are finalizing details before the policy shift is made official. Reports from Business Day indicated that internal consultations have intensified in recent weeks to align the fiscal and monetary frameworks.
The renewed push comes as inflation in South Africa has remained steady within the 3 to 6 percent range throughout 2025, creating room for the SARB to consider a lower target. Kganyago added that markets have already responded positively to the prospect, with the rand gaining and government bond yields dropping by up to 160 basis points since April, as highlighted by Reuters.
Analysts have described the move as a potential milestone for South Africa’s monetary credibility. While the lower target could enhance price stability and investor confidence, economists caution that premature implementation might constrain growth if inflation expectations adjust too quickly. The National Treasury is expected to announce a final decision on timing in its upcoming mid-term budget statement later this year, according to Bloomberg.
