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The Minister of Finance announced on 12 November 2025 that South Africa’s new inflation target will be set at 3%, with a 1 percentage point tolerance band. The decision, reached in agreement with the South African Reserve Bank (SARB) Governor, aims to enhance price stability and anchor inflation expectations in line with international best practice.
What Happened
The announcement followed extensive consultations between the Minister of Finance, the SARB Governor, the President, and Cabinet. The 1 percentage point band allows flexibility to manage unexpected inflationary shocks while maintaining the country’s long-standing flexible inflation-targeting approach.
The new framework replaces the previous 3–6% target range and will be implemented over the next two years. This move forms part of a broader macroeconomic policy review led by both National Treasury and the SARB, in collaboration through the Macroeconomic Standing Committee.
Official Response
According to the statement, the revised target aims to improve South Africa’s economic stability by reducing inflation expectations, lowering long-term interest rates, and encouraging household spending and investment.
“This decision strengthens the credibility of our monetary policy and supports a sustainable growth path,” the Minister said.
The Treasury noted that while short-term fiscal challenges may arise including slower nominal GDP and revenue growth the long-term gains of lower inflation outweigh these costs.
The SARB confirmed it will pursue the new target on a continuous basis and communicate any deviations clearly to maintain transparency and investor confidence.
Community Impact
Economists believe the lower target will help stabilize prices, create a more predictable economic environment, and improve investment sentiment. Over time, the move could result in lower borrowing costs, supporting businesses and households alike.
National Treasury and the SARB will continue coordinating policies closely to safeguard the economy amid global and domestic uncertainties.
