Reserve Bank and National Treasury prepare to lower inflation target

Team of experts and policymakers working diligently to enhance economic stability of South Africa

- SIPHELELE DLUDLA

THE South African Reserve Bank (Sarb) and the National Treasury are nearing the completion of their joint efforts to review and refine the nation's inflation target strategy.

A team consisting of experts and policymakers has been working diligently to formulate recommendations that aim to enhance the economic stability of South Africa, particularly in these challenging times characterised by global uncertainties.

"The joint South African Reserve Bank and the National Treasury team is almost done with its work on the inflation target and will soon present its recommendations to the Governor and the Minister of Finance," the Sarb said in its annual report yesterday.

Recently, discussions have emerged regarding whether South Africa's current inflation target midpoint of 4.5% is consistent with price stability of the 3-6% target range, and whether adjusting it to a lower rate might help secure the current trend of low inflation.

Analyses undertaken by the Sarb, Treasury and other experts have highlighted significant potential benefits from reducing the inflation target to 3%, and recommendations are expected to be a vital step in addressing these economic challenges.