SOUTH Africa can keep benchmark interest rates low by shifting its inflation-targeting framework to a reduced, single-point target from the current 3%-6% range, central bank Governor Lesetja Kganyago said.
Delivering a virtual keynote address on the country’s 21 years of inflation targeting, hosted by the University of Stellenbosch on Wednesday, Kganyago said lower inflation had generally benefitted the economy, including households of all income levels.
The public lecture coincides with the SARB’s 100 year anniversary and the rand turning 60 years old. This year also saw the commemoration of 25 years of central bank’s independence.
He said: “As lenders require less compensation for inflation, interest rates have come down. Furthermore, with expectations anchored inside the inflation target range, businesses no longer raise prices as soon as the exchange rate weakens. This credibility has helped us cut interest rates to record lows during the COVID-19 crisis – and we have been able
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