SARB Shoots for 3% Inflation — But National Treasury Isn’t on Board (Yet)

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South Africa’s Reserve Bank (SARB) has a new goal: keeping inflation at 3% in their future forecasts. But there’s a catch: it’s not official policy yet.

Finance Minister Enoch Godongwana says he won’t be locking in that 3% target in the upcoming Medium-Term Budget. And for good reason, only Cabinet, the President, and the Minister of Finance (not the Reserve Bank alone) have the authority to set that target. Any change requires formal consultation, no shortcuts.

What SARB is saying

In its 31 July Statement of the Monetary Policy Committee, SARB Governor Lesetja Kganyago explained the thinking:

• Inflation is currently at the bottom of the 3–6% range, with June CPI at 3%.

• Their model shows that targeting 3% could lead to more interest rate cuts, possibly five more, eventually bringing rates down to just below 6%.

• They believe aiming for lower inflation could strengthen the rand, cut borrowing costs, and give policy more breathing room.

• So they’re now forecasting with 3% as the anchor and encouraging the country to adjust expectations accordingly.

What the Minister of Finance is saying

Minister Godongwana issued a statement just a day later (1 August) saying: “Hold on, we’re not there yet.” He reaffirmed that:

• The official target range (3%–6%) hasn’t changed.

• Any shift will go through proper processes, not be driven by unilateral decisions.

• “As I emphasised during the Budget presentation, any adjustments will follow established consultation,” he said.

Why it matters

Lower inflation means lower interest rates which great news for borrowers, businesses, and investors. But if expectations aren’t properly managed, rushing into a new target could backfire, hurting confidence or growth. For now, it’s a case of SARB planning ahead, and Treasury taking its time.

👀 Watch this space: The target hasn’t changed (yet), but it might, just not without buy-in from the full economic leadership team.

📅 Key Dates:

• SARB rate cut to 7% took effect 1 August 2025

• Medium-Term Budget due later this year

Let’s see if policy and preference meet somewhere in the middle. Honestly, after the budget fiasco earlier this year, we can only be grateful that there are processes in place for the Medium-Term Budget.

Read more in the Media Release issued by National Treasury.