According to Citigroup, the South African Reserve Bank could lower its inflation target as soon as its policy meeting at the end of this month.<\/p>\n\n\n\n
\u201cWe recently wrote that the SARB would likely drop the inflation target in the third quarter\u201d to 3%, with a possible 1% plus-or-minus tolerance band, from its current 4.5% goal,\u201d said Gina Schoeman, the bank\u2019s economist for South Africa.<\/p>\n\n\n\n
\u201cWe believe there is a reasonable chance\u201d of this happening at the upcoming meeting.\u201d<\/p>\n\n\n\n
SARB Governor Lesetja Kganyago said on 1 July that a long-running review of the 3% to 6% inflation goal would be finalised \u201cvery soon,\u201d with the country\u2019s current tame price pressures presenting an opportunity to move.<\/p>\n\n\n\n
He added that shifting to a lower target would be more effective if it were backed by Finance Minister Enoch Godongwana, who said on Tuesday that \u201csuch decisions should not be taken in haste\u201d and that he has the final say on the matter.<\/p>\n\n\n\n
Still, Citigroup cited several reasons why the central bank might forge ahead in adjusting a framework that hasn\u2019t been changed since it was introduced 25 years ago, including low inflation expectations and research highlighting the benefits of aiming for a 3% goal.<\/p>\n\n\n\n
The central bank has repeatedly advocated for a 3% goal and since 2020 has worked to keep inflation close to the 4.5% midpoint of its target range.<\/p>\n\n\n\n
SARB studies show big benefits for public finances if the Treasury aims for a lower inflation target. <\/p>\n\n\n\n
Moving now, with price pressures forecast to remain low, would give the Treasury time to incorporate that shift into its analysis for a mid-term budget review in October, Schoeman said.<\/p>\n\n\n\n
It would be easier for the target to be adjusted between May and September, while price growth still remains in the 3% region, she added.<\/p>\n","protected":false},"excerpt":{"rendered":"
According to Citigroup, the South African Reserve Bank could lower its inflation target as soon as its policy meeting.<\/p>\n","protected":false},"author":59,"featured_media":828563,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[853,20457],"class_list":["post-831049","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-south-africa","tag-south-african-reserve-bank-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/831049","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=831049"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/831049\/revisions"}],"predecessor-version":[{"id":831050,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/831049\/revisions\/831050"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/828563"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=831049"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=831049"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=831049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}