Finance and Reserve Bank Weigh Adjustments to South Africa’s Inflation Target

01 September 2025

South Africa’s fiscal and monetary authorities are weighing possible adjustments to the country’s inflation target as part of efforts to strengthen long-term macroeconomic stability and inclusive growth.

Rising public debt and global inflation pressures in recent years have underscored the importance of robust frameworks to sustain economic growth. While domestic inflation has eased since the pandemic and the country’s debt trajectory has moderated, officials warn that global risks could still trigger renewed shocks. Policymakers say macroeconomic strategy must remain flexible, but also resilient enough to withstand uncertainty.

SARB’s inflation stance

The South African Reserve Bank (SARB) has maintained an inflation target band of 3‒6%, with its Monetary Policy Committee (MPC) aiming to anchor inflation near the 4.5% midpoint since 2017. At its July 2025 meeting, the MPC reiterated a preference for consumer price inflation to remain closer to the lower end of the range, around 3%, to entrench stability and confidence.

Research conducted by the SARB and National Treasury has highlighted that a wide target band and persistently high inflation impose long-term costs, particularly through entrenched inequality and slower growth.

Treasury review and collaboration

In its 2024 Macroeconomic Policy Review, the National Treasury concluded that monetary policy goals have been largely met, with inflation expectations softening in line with actual outcomes. The review reinforced the view that low and stable inflation supports economic growth, while also acknowledging that adjustments to the framework could enhance its effectiveness.

To this end, the Macroeconomic Standing Committee (MSC)—a joint body of Treasury and SARB—undertook additional technical work to assess the appropriateness of the current target range.

Next steps

With the technical process nearing completion, the MSC will present its recommendations to the Minister of Finance and the Governor of the SARB. Any changes to the target band will be jointly agreed upon, with the Finance Minister expected to make a formal announcement once a decision is reached.

Officials emphasised that, in line with past practice, any adjustments will remain evidence-based and aimed at safeguarding both price stability and sustainable growth.