South African Reserve Bank Governor Lesetja Kganyago expects the National Treasury and monetary authority to reach an agreement over a new inflation target, after his announcement last week that policymakers will now aim for 3% drew a terse reaction from the finance minister.
“Conversations continue and I have got no doubt we will find each other,” Kganyago told the bank’s annual general meeting in Pretoria on Friday. The working relationship between Treasury and the Sarb has “remained strong,” he said.
The central bank cut interest rates by 25 basis points to 7% on July 31 and unexpectedly announced that it now prefers to anchor inflation expectations at the floor of its 3% to 6% target.
Finance Minister Enoch Godongwana called the move unilateral and criticised it for breaching the “established consultation process” between the two institutions, who began reviewing the inflation framework last year. The target has not been revised
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