EDITORIAL: Will lower inflation make space for a lower target?
The Reserve Bank is keen to seize the low-inflation moment to push ahead with lowering the inflation target
The news out of the Reserve Bank’s monetary policy committee meeting was notable for at least two reasons. One was that the committee’s take on the inflation outlook, and the views of its members, proved unexpectedly dovish. The other, related to this, was that the Bank is clearly keen to seize the low-inflation moment to push ahead with lowering the inflation target — and has stepped up its campaign to win support.
The committee agreed on a 25 basis point (bps) rate cut (https://www.businesslive.co.za/bd/economy/2025-05-29-reserve-bank-cuts-repo-rate-to-725/), though one of its members would have preferred 50 bps. That in itself was an important, and unexpected, dovish signal. A while ago most in the market weren’t expecting a cut at all at this meeting. Going into the meeting opinions shifted rapidly, and in the end most analysts expected a 25 bps cut. But while some expected that the committee might split, with some wanting to hold, almost no-one seems to have expected a vo...
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