{"id":63751,"date":"2024-04-06T07:08:13","date_gmt":"2024-04-06T07:08:13","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa"},"modified":"2024-04-06T07:21:24","modified_gmt":"2024-04-06T07:21:24","slug":"big-interest-rate-shift-on-the-cards-for-south-africa","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa","title":{"rendered":"Big interest rate shift on the cards for South Africa"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>The South African Reserve Bank (SARB) has reiterated its intentions to review the country\u2019s current inflation target range, with governor Lesetja Kganyago pointing to the need for a narrower, lower range.<\/p>\n

Introduced in 2000, the SARB\u2019s target range is currently set at 3% to 6%. The Monetary Policy Committee (MPC) is looking for inflation to settle around the midpoint (i.e., 4.5%) to determine adjustments to interest rates.<\/p>\n

Kganyango has maintained for months that the central bank will not make any policy adjustments \u2013 especially rate cuts \u2013 until inflation has been tamed and brought under control, stabilised at this mid-point.<\/p>\n

However, the Bureau for Economic Research (BER) said in a note this week that the SARB is pushing for a significant shift for the range.<\/p>\n

In an interview, Kganyago told Reuters that he would prefer to establish a lower inflation target before 2025, the BER noted.<\/p>\n

\u201cA team of policymakers, comprising the SARB and the National Treasury, are busy identifying the appropriate range and the associated risks,\u201d it said.<\/p>\n

\u201cAlong with identifying the risks, the team must advise the governor on the appropriate timeline for achieving the target.\u201d<\/p>\n

The BER said there had been plans to gradually lower the target since its inception in 2000, first taking it to 3% to 5%, and eventually to 2% to 4%.<\/p>\n

\u201cThe governor feels it was a mistake that the target was never lowered. The SARB currently has an objective of 4.5% \u2013 the midpoint of the 3-6% target \u2013 but expressed that it would prefer to see inflation at 3%,\u201d the BER said.<\/p>\n

Impact on interest rates<\/p>\n

Moving the inflation target band before 2025 raises serious questions about the policy moves South Africans can expect in 2024.<\/p>\n

Based on the current inflation projections\u2014and the current 4.5% target\u2014the SARB\u2019s forecasts see 50 basis point rate cuts this year (down from previous forecasts of 75 basis points), likely in the last two meetings of the year (September and November).<\/p>\n

However, if the inflation target is lowered to 3% or 4%, the wait for a turn in the cutting cycle may be even longer.<\/p>\n

Inflation has been on an upward trajectory in the first quarter of 2024 so far, driven by higher fuel prices and other cost-of-living pressures. While this is expected to ease in the latter half of the year, it may not be enough to meet the mid-point target.<\/p>\n

The BER noted that Headline Inflation was 5.6% year over year in February, and the SARB forecasts it to slow to 4.5% only in 2025Q4.<\/p>\n

In addition, other inflationary pressures are cropping up \u2013 most notably the risk of higher food inflation due to drought conditions and extreme weather events, as well as a more recent five-year wage agreement in the mining sector that has come in above inflation forecasts.<\/p>\n

\u201cThe SARB often flags real wage increases that exceed productivity growth as an upside risk to the inflation outlook,\u201d the BER said.<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. The South African Reserve Bank (SARB) has reiterated its intentions to review the country\u2019s current inflation target range, with governor Lesetja Kganyago pointing to the need for a narrower, lower range. Introduced in 2000, the SARB\u2019s target range is currently set at 3% to 6%. The Monetary Policy Committee (MPC) is looking […]<\/p>\n","protected":false},"author":84,"featured_media":63750,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-63751","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nBig interest rate shift on the cards for South Africa - South Africa<\/title>\n<meta name=\"description\" content=\"The South African Reserve Bank (SARB) has reiterated its intentions to review the country\u2019s current inflation target ran ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Big interest rate shift on the cards for South Africa\" \/>\n<meta property=\"og:description\" content=\"The South African Reserve Bank (SARB) has reiterated its intentions to review the country\u2019s current inflation target ran ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-06T07:08:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-06T07:21:24+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/04\/sm_1712375392.361349.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"683\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Big interest rate shift on the cards for South Africa\",\"datePublished\":\"2024-04-06T07:08:13+00:00\",\"dateModified\":\"2024-04-06T07:21:24+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa\"},\"wordCount\":489,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/04\/sm_1712375392.361349.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/big-interest-rate-shift-on-the-cards-for-south-africa\",\"name\":\"Big interest rate shift on the cards for South Africa - 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