Technical work on inflation target review completed, says Treasury
The National Treasury and the South African Reserve Bank provided an update on Monday on the review of the country’s inflation target as part of ongoing macroeconomic policy adjustments.
Since the COVID-19 pandemic, domestic inflation has eased, and the country’s debt trajectory has moderated. Authorities said monetary policy has been effective, while fiscal policy is moving toward a more sustainable path.
South Africa currently targets consumer inflation within a 3–6% band, with the SARB seeking to anchor inflation at the midpoint of 4.5%. The framework, adopted in 2000, has remained unchanged for 25 years.
Research and consultations by Treasury and SARB have examined whether lowering the target would better align South Africa with its trading partners. A joint Macroeconomic Policy Review noted that while the framework is “fit for purpose and flexible,” adjustments could improve its effectiveness.
The review also highlighted the costs of relatively high inflation, including weaker economic performance and entrenched inequality.
At its July 2025 meeting, the SARB’s Monetary Policy Committee said it preferred inflation to remain closer to the bottom of the current range. “To sustain this progress and meet its constitutional mandate of price stability, the MPC expressed its preference for inflation to remain low, around the bottom end of the target range,” it said.
The Macroeconomic Standing Committee, a joint body of Treasury and SARB, has completed technical work on the target and will draft recommendations. These will be presented to the Minister of Finance and the SARB Governor, who will decide jointly on any changes.
The Minister of Finance will make a formal announcement “as soon as is practical to anchor expectations,” Treasury said.
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