Business Times reports that the SA Reserve Bank (SARB) has set out its strongest case yet for moving toward a 3% consumer inflation target.
It released a series of technical stress tests in its October monetary policy review that show the economy is now capable of sustaining lower, more stable price growth. The review comes just three weeks before the medium-term budget, in which some market participants expect finance minister Enoch Godongwana to announce the shift toward a lower inflation target.
SARB governor Lesetja Kganyago indicated that he “would not understand” if the government continued to plan fiscally on 4.5%, the midpoint of the current target range, because “it is not what the inflation target is; it is what the inflation outcomes are.” He also noted that inflation over the forecast horizon was already tracking close to the Bank’s 3% objective. Kganyago opined that, together, the stress tests made the case that SA’s inflation process was now stable enough, statistically and psychologically, to support a 3% target.
- Read the full original of the report in the above regard by Jana Marx at Business Times (subscriber access only)
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