National Treasury and Reserve Bank consider lowering inflation targeting band

By Thebe Mabanga

South Africa’s inflation target is under formal review, with the possibility of being lowered from the current range of 3% to 6%. This was confirmed in a joint statement by the National Treasury and the South African Reserve Bank on Monday.

At the most recent Monetary Policy Committee (MPC) meeting, Reserve Bank Governor Lesetja Kganyago indicated a preference for using the lower end of the inflation target band to guide inflation and anchor expectations.

This prompted the National Treasury to issue a statement clarifying the respective roles and mandates, noting that any official change has not yet been confirmed.

The statement also referenced the Covid-19 pandemic as a turning point for global inflation trends.

“Since the pandemic and its aftermath, domestic inflation has eased, and the debt trajectory tempered,” the statement noted.

 “Monetary policy has been effective, and fiscal policy is actively moving to a more sustainable