The International Monetary Fund (IMF) has said it supports the lowering of South Africa’s inflation target. However, it said the process needs to be carefully managed.
Currently the inflation target of the South African Reserve Bank (SARB) is between three and six percent. However, there have been calls for it to be lowered, with further impetus given to this after annual inflation in South Africa was recorded at below three percent earlier this month.
The inflation target has not been revised since 2000.
The IMF said: “Shifting from the current target band to a lower point target at an appropriate time could help lower expectations and inflation. Careful design and gradual implementation will be key to minimise potential near-term output costs.”