South African Reserve Bank (SARB) Governor Lesetja Kganyago announced on Thursday, October 9, 2025, that the central bank and the National Treasury have reached an agreement to lower the country’s inflation target, though discussions are still ongoing about when to implement the adjustment.
Kganyago had sparked market reactions in July after indicating that the SARB would effectively aim for a 3% inflation target, deviating from the official 3–6% range established by Finance Minister Enoch Godongwana.
Following the announcement, Godongwana rebuked Kganyago for making a “unilateral announcement,” though the two later released a joint statement affirming that they shared a common position on the matter.
Speaking before lawmakers on Thursday, Kganyago clarified:
“There isn’t a disagreement about the lowering of the target; it’s a question of timing.”
He admitted that the SARB’s communication surrounding the inflation target “was not what it was supposed to be” and noted that he and Godongwana had since met to instruct their teams to “go tie down these loose ends.”
“That’s why you will find our (joint) statement does not say by this date, as soon as it’s practically possible. And the poor chaps are working very hard to make sure that all those loose ends are tied,”
Kganyago added.
The governor has long supported reducing the inflation band, arguing that the current range makes South Africa’s economy less competitive. In 2025, he has been particularly vocal, saying that the country’s moderate inflation environment presents the perfect opportunity to “lock in” low inflation.
According to Kganyago, both the decline in inflation and the SARB’s commitment to a lower target have strengthened the rand and reduced government borrowing costs on benchmark bonds by between 80 and 160 basis points since April.
“When the cost of borrowing for the government comes down, the cost of borrowing for everybody else also comes down,” he emphasized.
