SA entering a ‘low-inflation era’ as Treasury formalises lower target

Reserve Bank Governor Lesetja Kganyago confirms discussions to lower SA’s inflation target

- SIPHELELE DLUDLA

GOVERNOR Lesetja Kganyago said South Africa's inflation outlook has now stabilised, with the bank projecting inflation to average 3.4% in 2025, 3.6% in 2026, and 3% by 2027. SARB

(SARB)

SOUTH African Reserve Bank (Sarb) Governor Lesetja Kganyago said on Tuesday that the country has entered an era of “low and stable inflation” and confirmed that discussions with the National Treasury are at an advanced stage to formally lower South Africa's inflation target.

Speaking at the SA Tomorrow Investment Conference 2025, Kganyago said a joint statement by the Sarb and the Treasury had already been issued following their meeting with the Fiscal and Monetary Policy Commission, and that a formal announcement would be made “as soon as it is politically possible.”

“Tt was important that the joint team of the Treasury and the Reserve Bank be ‘iven time to tie the loose ends before a formal announcement could be made,” Kganyago said.

The governor traced South Africa's disinflation journey, explaining that inflation expectations, once anchored around 6.1-6.2%, had gradually shifted toward the midpoint ae the target range (4.5%) after the Sarb formally adopted that focus in 2017.

“In 2017, we decided to aim for the middle of the target range—4.5%. By 2019, inflation expectations had converged toward that midpoint,” he said.

However, as inflation fell sharply after the global inflation surge of 2022, the Sarb took what Kganyago called an “opportunistic disinflation” approach.