Kganyago says inflation target review nearing end

The Sarb’s target has remained at 3% to 6% since 2000.

South African Reserve Bank Governor Lesetja Kganyago said a review of its 3% to 6% inflation target is getting close to the end.

“We have got a process with the Treasury that we believe is coming to a conclusion,” Kganyago said on Thursday. “I can’t quite give you the timeline, because the debates become very rigorous, and once that process completes itself, we will say what the target is, whatever the number becomes.”

Read: Treasury backs Sarb inflation target review [Feb 2024]

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The central bank aims to anchor inflation expectations at the midpoint of its target range, which it adopted in 2000 and has not revised since.

Policymakers have argued that this is part of the reason South Africa’s inflation is higher than its emerging market peers. Kganyago has repeatedly called for the goal to be lowered.

Read:
Kganyago says South Africa’s inflation target should be lower 
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But he dismissed the suggestion that the central bank is already aiming for 3%, noting that there is no point in pursuing a target quietly since the whole point of the exercise is to publicly persuade South Africans that price pressures were heading lower.

“If you set a target and it’s a secret and nobody knows it, but you are targeting it quietly, it’s not useful as a policy anchor,” Kganyago told a press conference north of Johannesburg, adding that the current midpoint of the range is not sufficient.

“If you are talking of price stability and low inflation, it is something lower than 4.5%,” he said.

Read: Just a 25bp cut by Sarb SA inflation target review to preserve price stability © 2024 Bloomberg L.P.

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