What specific inflation target has the South African Reserve Bank (SARB) adopted, and how does Governor Kganyago affirm its commitment to it amid rising inflation?

The South African Reserve Bank (SARB) has adopted a strict 3% inflation target, replacing the previous 3%–6% range that had been in place since 2000. Governor Lesetja Kganyago affirmed the bank’s unwavering commitment to this target by stating, 'Let there be no doubt, the South African Reserve Bank will be getting inflation back down to 3%', and emphasized that 'there was no question of the central bank reverting back to the wider target'. He linked the shift to tangible benefits—specifically 'lower government borrowing costs'—and called the target reform 'one of the big wins for South Africa recently', adding, 'We are not going to snatch defeat from the jaws of victory.'

Why did the SARB raise interest rates last week, and what does this signal about its response to the Iran war's economic impact?

The SARB raised borrowing costs by 25 basis points to 7%—its first rate increase in three years—because inflationary pressures intensified after the start of the Iran war on February 28, driving inflation away from the 3% target and projecting it to reach 4.9% as early as the third quarter. Governor Kganyago stated the hike was intended to 'send a clear and credible signal that we will keep inflation under control', and noted that policymakers had even considered a larger 50-basis-point increase and reviewed three scenarios—all implying further tightening, with the most adverse forecasting an additional 75 basis points by the third quarter. He stressed that decisions remain 'meeting by meeting', but the policy objective—to return inflation to 3%—is 'crystal clear'.

South Africa's Kganyago Vows to Return Inflation to 3%

Jun 2, 2026

South African Reserve Bank Governor Lesetja Kganyago pledged to restore inflation to the 3% target via interest rate hikes, citing surging energy prices driven by the Iran conflict.

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South Africa's Kganyago Vows to Return Inflation to 3%

South Africa's Kganyago Vows to Return Inflation to 3%

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