Lesitja Kganyago, Governor of the South African Reserve Bank, said that the country's inflation rates are on track to achieve the central bank's new target of 3% by 2026, in light of stable prices.
Kganyago explained, in statements to Reuters on the sidelines of the World Economic Forum meetings in Davos, that the bank expects the annual inflation rate for 2025 to range between 3.2% and 3.4%, with the release of official data on Wednesday.
He pointed out that the average expected inflation during the current year is about 3.6%, indicating that the distribution of inflation across various categories shows levels close to 3%, which confirms that the country is on the targeted path to achieve the new goal in 2026.
Last year, the South African government and the central bank reduced the inflation target for the first time in 25 years to 3%, with a margin of error of one percentage point up or down, after the bank had previously expected to reach this goal by 2027.
Regarding monetary policy, Kganyego explained that the central bank’s main lending rate currently stands at 6.75%, adding that the bank’s forecast model still allows room to reduce the interest rate by 25 basis points two additional times during the current year. The Monetary Policy Committee of the South African Reserve Bank is scheduled to hold its first meeting for the current year next week.
