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Reuters reports that SA Reserve Bank (SARB) policymakers are in discussions on lowering the inflation target, governor Lesetja Kganyago advised on Wednesday.
He commented that a lower target would make the country more competitive and bring the central bank into line with peers. Kganyago said he preferred a decision that would lower the target from its current 3%-6% range “before we get to 2025”, but teams from the Bank and National Treasury were still identifying the appropriate range and risks associated with it. “The teams will advise the governor and the [finance] minister and say, ‘OK, this is the appropriate target and this is the appropriate timeline within which we have got to achieve the target’,” Kganyago indicated in an interview. SA introduced its inflation-targeting framework in 2000, and had planned to lower the target to 3%-5% and then 2%-4%. But the target was never lowered, something Kganyago views as a big mistake. He said the current band was too wide and served to anchor inflation expectations higher than the bank would like.
- Read the full original of the report in the above regard by Kopano Gumbi & Alexander Winning at BusinessLive
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