Speaking during a briefing on Thursday, Kganyago outlined the long-term benefits of reducing the inflation target, noting that it would lead to structurally lower interest rates.

According to the Governor, a lower inflation target would translate into reduced loan repayments for consumers, particularly those burdened by debt, while also providing a more stable and predictable economic environment. This, he argued, would support greater investment and job creation.

“What the scenario shows is that you actually end up with higher growth over the forecast horizon, and higher growth will benefit the entire economy. But a growth economy should also be an economy that creates jobs, which means that we would be making progress to dealing with the job creation challenge,” said Kganyago.

The Reserve Bank is currently conducting internal assessments to determine the appropriate target rate and intends to make a formal recommendation to the Finance Minister once this process is complete.

The proposal to lower the inflation target forms part of a broader policy shift aimed at improving macroeconomic stability in SA, where high interest rates have long been a challenge for both households and small businesses. By anchoring inflation expectations more firmly at a lower level, the central bank hopes to lay the groundwork for sustained economic expansion.

--SABC/ChannelAfrica--