Inflation target changes on the cards for South Africa

South African Reserve Bank Deputy Governor Fundi Tshazibana said there is broad agreement that the country’s 3% to 6% inflation target range is too wide.

The SARB and the National Treasury have been in talks on a new inflation framework since February 2024 and she said that the technical teams conducting the discussions will give their recommendations soon.

“Where we have landed is that there’s a broad consensus among us that our range is too wide and out of line with that of our trading partners,” Tshazibana told reporters in Cape Town on Wednesday.

“We are at the point where the technical teams will make recommendations to the Minister of Finance and the Governor of the Reserve Bank on a way forward.”

Tshazibana, though, said the Treasury and central bank are not ready to make any public announcements on the review, which is being closely watched by investors for confirmation that the SARB will maintain its vigilance on price pressures.

The South African currency last week gained after Deputy Finance Minister David Masondo said an announcement on a new inflation target is imminent.

South Africa’s current inflation regime has not been altered since its adoption 25 years ago. Policymakers aim to peg inflation expectations at the midpoint of that range and are currently beating their goal, with annual inflation in April running at 2.8%.