Lower inflation target boosts spending potential

FINANCE Minister Enoch Godongwana has lowered the inflation target to 3% with a one percentage point tolerance band.

- MAYIBONGWE MAQHINA

Tabling the Medium Term Budget Policy Statement (MTBS), Godongwana said the revised inflation target followed an agreement between South African Reserve Bank (SARB) Governor Lesetja Kganyago and his consultations with both President Cyril Ramaphosa and Cabinet.

The new inflation target, down from between 3% and 6%, will be implemented over the next two years.

"Over time, the lower target will decrease inflation expectations and inflation, creating room for lower interest rates. This supports household spending and business investment, boosting economic growth and job creation," Godongwana said.

Addressing journalists at a media lockup briefing before Godongwana tabled his MTBPS, Kganyago said that he and the finance minister agreed on the new inflation target in line with South Africa's peers.