Business—9 Oct 2025

Changes for inflation target in South Africa

South African Reserve Bank (SARB) Governor Lesetja Kganyago said on Thursday that the central bank and National Treasury agreed that the country’s inflation target should be lowered but they were still discussing when to make the change.

Kganyago surprised financial markets in July by saying the SARB would effectively target 3% inflation, rather than the formal 3-6% range set by Finance Minister Enoch Godongwana.

Godongwana rebuked Kganyago for his “unilateral announcement”, though the two officials later issued a joint statement saying they were on the same page.

Addressing lawmakers on Thursday, Kganyago said: “There isn’t a disagreement about the lowering of the target; it’s a question of timing.”

He acknowledged the SARB’s communication over the target was not what it was supposed and said he and Godongwana had met and told their teams to “go tie down these loose ends”.

“That’s why you will find our (joint) statement does not say by this date, as soon as it’s practically possible. And the poor chaps are working very hard to make sure that all those loose ends are tied,” Kganyago said.

Kganyago has advocated a lower inflation target for years, saying the current band makes Africa’s biggest economy uncompetitive.

But he has argued particularly forcefully in 2025, saying that this year’s well-contained price pressures present the ideal opportunity to “lock in” low inflation.

Kganyago said on Thursday that lower inflation and the SARB’s preference for a lower target had boosted the rand and brought down government borrowing costs on benchmark bonds by between 80 and 160 basis points since April.

“When the cost of borrowing for the government comes down, the cost of borrowing for everybody else also comes down,” he said.