South Africa’s (SA) central bank Governor Lesetja Kganyago said this Tuesday that the bank would bring inflation back to its 3% target, defending last week’s rate hike as necessary to prevent second-round effects from \u200cthe Middle East oil shock from becoming entrenched.<\/p>\n
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The SA Reserve Bank (SARB) raised its key repo rate by 25 basis points last Thursday, to 7%, with four out of six Monetary Policy Committee members backing the decision.<\/p>\n
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SA’s inflation climbed to 4% in April from 3.1% in March, sitting at the upper end \u2060of the central bank’s target range.<\/p>\n
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The SARB, which targets inflation at 3% with a 1-percentage-point tolerance band, raised its inflation forecasts to 4.4% and 3.7% for 2026 and 2027 respectively.<\/p>\n
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Africa’s most industrialised economy is a net oil importer and has seen large price hikes on the back of the Iran war, which has pushed inflation higher, despite a modest government intervention on the fuel levy to cushion the full effect of the price increases.<\/p>\n
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The Governor said second-round effects from the oil shock -including spillovers \u200cto \u2060food prices from higher diesel and fertiliser costs – were developing and needed to be tackled. The bank is projecting core inflation of around 4% in the first half of next year.<\/p>\n
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Kganyago warned that inflation expectations could quickly edge higher as price setters have a fresh \u2060memory of elevated inflation, adding that raising rates now was a move to counter that risk.<\/p>\n
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“By changing rates, we hope to send a clear and credible signal that we will keep \u2060inflation under control,” Kganyago said in a speech to economists in Johannesburg, warning that the bank would not allow a price spiral to take hold at \u2060the expense of the most vulnerable.<\/p>\n
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Kganyago firmly ruled out reverting to the old 3\u20136% inflation target band.<\/p>\n
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The next inflation expectation survey will be released at the end of June.<\/p>\n
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–Reuters–<\/p>\n","protected":false},"featured_media":36067,"template":"","meta":{"_acf_changed":false,"_links_to":"","_links_to_target":""},"news-type":[44],"class_list":["post-36066","news","type-news","status-publish","has-post-thumbnail","hentry","news-type-finance","entry"],"acf":{"short_description":"SA central bank Governor Lesetja Kganyago said this Tuesday that the bank would bring inflation back to its 3% target","published_date":"2026-06-02 14:45:44","news_description":"SA central bank Governor Lesetja Kganyago said this Tuesday that the bank would bring inflation back to its 3% target","form_embed":"","author":"","image_caption":""},"_links":{"self":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/36066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/types\/news"}],"version-history":[{"count":1,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/36066\/revisions"}],"predecessor-version":[{"id":36068,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news\/36066\/revisions\/36068"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media\/36067"}],"wp:attachment":[{"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/media?parent=36066"}],"wp:term":[{"taxonomy":"news-type","embeddable":true,"href":"https:\/\/www.channelafrica.co.za\/channelafrica\/wp-json\/wp\/v2\/news-type?post=36066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}