Inflation target at 3%

LOWERED: GOVT SAYS NEW GOAL WILL SUPPORT INVESTMENT, JOBS

- Liesl Peyper

TIMING. Reserve Bank governor Lesetja Kganyago has lobbied for a lower inflation target. Picture: Bloomberg

(Bloomberg)

South Africa's new inflation target has officially been lowered to 3% - the first adjustment in 25 years.

Finance Minister Enoch Godongwana announced the revised target in the medium-term budget policy statement yesterday - a move that was widely expected.

The new target immediately replaces the former target range of 3% to 6%.

Lesetja Kganyago, governor of the South African Reserve Bank (Sarb), had lobbied for a lower inflation target for months.

Asked during a media briefing if he feels "vindicated" now that the target has officially been lowered, Kganyago said: "There's only one winner - the South Africans who will enjoy a low-inflation economy, which means that the consideration about inflation is taken out of the decision-making process."

The 3% target will allow for a one percentage point tolerance band on either side to accommodate normal economic fluctuations.