Lesetja Kganyago, the governor of the South African Reserve Bank (SARB), has warned that at the current inflation target of between 3% and 6% prices in South Africa could double every twelve years.
Speaking at a G20 meeting of finance minister and central bank governors held in KwaZulu-Natal, Kganyago said that there was consensus within the government and the SARB that the inflation target should be lower.
Kganyago was quoted as saying: “Now that is the conversation we should have with South Africans. Do you want prices doubling every 12 years, every 16 years, or every 24 years? [In] advanced economies, prices double every 36 years because they are targeting 2%.”
However, some economists have warned against the lowering of the inflation target, saying that interest rates would have to remain high for some time to bring inflation to a lower level.