The ANC has endorsed finance minister Enoch Godongwana’s position that any adjustment to the inflation target falls under his authority, after Reserve Bank governor Lesetja Kganyago signalled a shift last week towards a 3 % anchor in policy forecasts.
Yet, the ANC has tasked its economic transformation committee (ETC) with reviewing a proposal to lower the target.
Since 2000 SA has maintained a 3%‑6% inflation band, with the Bank implicitly focusing on the 4.5 % midpoint. Godongwana, who also serves on the ETC, rebuffed Kganyago’s proposed shift, saying on Friday any change must follow formal consultations between the Treasury, Bank and cabinet.
On the sidelines of the ANC’s national executive committee (NEC) meeting at the weekend, electricity minister Kgosientsho Ramokgopa said the ETC supported Godongwana’s view and reaffirmed that decisions on inflation policy must navigate technical assessments and political consensus.
The ETC had had insufficient time to finalise a position on the proposal to lower the inflation target, he said.
“The inflation target band is 3%-6%. What the Reserve Bank has been doing historically, since the introduction of that, was to pursue a midpoint of 4.5% and [the governor] is making a case for the possibility of revising the inflation targeting to a ceiling of about 3%. It’s a welcome conversation,” Ramokgopa said.
“The NEC has assigned the ETC to have a much deeper conversation and provide guidance on how best we can respond to this proposal. And ultimately, it will be the minister of finance … [Godongwana] who will make that determination. Of course, the ETC will make its contribution.”
Business Day previously reported that the DA, the second-largest party in the GNU, has voiced support for the Bank’s proposal to lower the country’s inflation target range, a move that could reshape the monetary policy landscape. The party, whose deputy federal chair, Ashor Sarupen, is the deputy finance minister, has, however, yet to adopt a formal position. This position would have to be adopted by its federal executive council.
Godongwana said in a statement on Friday that the Treasury had no plans to announce a new inflation target in the medium-term budget policy statement, to be presented in October or November. This came after Kganyago announced the Bank’s shift to a 3% target after last week’s meeting of the monetary policy committee.
“As I emphasised during the budget presentation, any adjustments to our inflation-targeting framework will follow the established consultation process. This means comprehensive consultation between the National Treasury, Reserve Bank, cabinet and relevant stakeholders — not unilateral announcements that pre-empt legitimate policy deliberation,” Godongwana said.
“Any changes to the target, if necessary, will follow this process that I have outlined above.”
maekot@businesslive.co.za
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