Economists make case for up to 200 basis points interest rates cut

Government advised to keep inflation target at current range of 3%-6%

- By Mpho Sibanyoni

Economists have cautioned that government’s plan to lower inflation targeting would result in consumer paying high interest rates on credit for longer periods.

This follows reports that David Masondo, the deputy finance minister, stated at an investment conference this week that they were working very hard to build the right inflation framework and that they will make a statement soon.

The headline consumer price index in the country has a target range of 3% to 6%. This guides the Reserve Bank to increase interest rates when inflation is above 6%.

Between March 2024 and March 2025, inflation cooled from 5.3% to 2.7%.

Independent economist Mandla Maleka criticised the move.

“It’s a big ask considering that inflation has been contained below 6% for the last decade.

“And despite that, interest rates only went south near 3% only once in the corresponding decade.

“Therefore, if we revise the targets, are we saying we will require a parallel response from interest rates?