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Sunday Times reports that Finance Minister Enoch Godongwana is expected to announce on Wednesday that SA will lower its consumer inflation target from the present range of 3% to 6% to 3%.
The announcement will apparently be contained in the medium-term budget policy statement (MTBPS) to be tabled on Wednesday. This is a major coup for SA Reserve Bank governor Lesetja Kganyago, who has spent months championing the policy change. It is also a surprising policy shift, as for months indications were that the National Treasury did not favour lowering the range originally set in 2000. It seems that Godongwana changed his mind after meetings with global investment banks JPMorgan and Goldman Sachs. Approached for comment, the Treasury said it was in a closed period ahead of the tabling of the MTBPS and could not comment.
It has been Kganyago’s argument that a policy guided by a lower and narrower inflation target would benefit the poor and that SA needed to get its inflation in line with levels similar to its peers globally. But, not all economists agree. Independent economist Roelof Botha rejected the move and said: “The statement that an inflation target point of 3% will be pro-poor is devoid of truth.”
- Read the full original of the in-depth report in the above regard by Khulekani Magubane at Sunday Times (subscriber access only)
Get other news reports at the SA LabourNews home page