{"id":829945,"date":"2025-06-30T14:01:27","date_gmt":"2025-06-30T12:01:27","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=829945"},"modified":"2025-06-30T14:01:33","modified_gmt":"2025-06-30T12:01:33","slug":"reserve-bank-wants-to-stop-prices-from-doubling-every-16-years","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/829945\/reserve-bank-wants-to-stop-prices-from-doubling-every-16-years\/","title":{"rendered":"Reserve Bank wants to stop prices from doubling every 16 years"},"content":{"rendered":"\n<p>South African Reserve Bank Governor Lesetja Kganyago reinforced his argument for adopting a lower inflation target, noting that the current goal hurts the rand and allows prices to march higher.<\/p>\n\n\n\n<p>\u201cAlthough an inflation rate of 4.5% may seem moderate, it still causes prices to double every 16 years,\u201d Kganyago said in the SARB\u2019s annual report published Monday. <\/p>\n\n\n\n<p>\u201cThis is hard to reconcile with our constitutional obligation to safeguard the value of the currency.\u201d<\/p>\n\n\n\n<p>The central bank prefers to anchor inflation expectations at the midpoint of its 3% to 6% target band, which is currently under review.&nbsp;<\/p>\n\n\n\n<p>Kganyago\u2019s remarks mark his latest effort to sway the debate toward lowering the goal with the central bank advocating for 3%. South African inflation rate was 2.8% in May.<\/p>\n\n\n\n<p>The low level of inflation offers South Africa an \u201c<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-06-03\/s-africa-central-bank-sees-amazing-chance-to-lower-cpi-goal\" target=\"_blank\" rel=\"noreferrer noopener\">amazing<\/a>\u201d opportunity to adjust a framework that hasn\u2019t been revised since it was introduced in 2000, David Fowkes, a member of the bank\u2019s monetary policy committee, said earlier this month.<\/p>\n\n\n\n<p>\u201cThe main concern with South African inflation is not our ability to hit the target,\u201d Kganyago said. <\/p>\n\n\n\n<p>\u201cRather, it is that our target is high compared to other countries. For this reason, despite our success in stabilizing inflation, the price level is almost 20% higher than it was in 2021.\u201d<\/p>\n\n\n\n<p>A joint SARB and Treasury team is \u201calmost done\u201d with technical work on the review and will present recommendations soon to Kganyago and Finance Minister Enoch Godongwana, the SARB said.<\/p>\n\n\n\n<p>According to the bank\u2019s modeling, shifting to a 3% target would yield significant benefits, with inflation expectations declining quickly while \u201cborrowing costs would fall more significantly\u201d compared to the SARB\u2019s baseline forecast.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>South African Reserve Bank Governor Lesetja Kganyago reinforced his argument for adopting a lower inflation target, noting that the current goal hurts the rand and allows prices to march higher.<\/p>\n","protected":false},"author":59,"featured_media":828561,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[21832,3619,2342],"class_list":["post-829945","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-lesetja-kganaygo","tag-sarb","tag-treasury"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/829945","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=829945"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/829945\/revisions"}],"predecessor-version":[{"id":829961,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/829945\/revisions\/829961"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/828561"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=829945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=829945"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=829945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}